You Are Comparing Two Investment Options

question 61

Multiple Choice

You are comparing two investment options. The cost to invest in either option is the same today. Both options will provide you with $20,000 of income. Option A pays five annual payments starting
With $8,000 the first year followed by four annual payments of $3,000 each. Option B pays five
Annual payments of $4,000 each. Which one of the following statement is correct given these two
Investment options?

• A) Both options are of equal value given that they both provide $20,000 of income.
• B) Option A is the better choice of the two given any positive rate of return.
• C) Option B has a higher present value than option A given a positive rate of return.
• D) Option B has a lower future value at year 5 than option A given a zero rate of return.
• E) Option A is preferable because it is an annuity due.

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Definitions:

Right Atrium

The right upper chamber of the heart that receives deoxygenated blood from the body through the venae cavae and pumps it into the right ventricle.

Right Ventricle

The chamber of the heart that pumps deoxygenated blood to the lungs for oxygenation.

Resting Blood Pressure

The pressure in the arteries when the heart rests between beats, indicative of heart health.

Diagnosed

The identification of the nature and cause of an illness or problem through examination, testing, and analysis by a healthcare professional.