Marcus Is Scheduled to Receive Annual Payments of $3,600 for Each

question 42

Multiple Choice

Marcus is scheduled to receive annual payments of $3,600 for each of the next 12 years. The discount rate is 8 percent. What is the difference in the present value if these payments are paid at the beginning of each year rather than at the end of each year? 

• A) $2,170.39 
• B) $2,511.07 
• C) $2,021.18 
• D) $2,027.94 
• E) $2,304.96 

---

Definitions:

Classical Economists

A group of 18th- and 19th-century economists who believed in the theory that markets operate best without government interference, focusing on the importance of free markets for economic development.

Quantity Theory

An economic theory that suggests the general price level of goods and services is directly proportional to the amount of money in circulation.

Laissez Faire

An economic philosophy advocating for minimal governmental intervention in the marketplace and the free operation of supply and demand forces.

Say's Law

The principle that supply creates its own demand, meaning production necessarily leads to an equivalent level of demand in the economy.