Payments of $2,500 Due Now and $6,500 Due in 90

question 155

Multiple Choice

Payments of $2,500 due now and $6,500 due in 90 days are to be replaced by a $4,000 payment due in 120 days and a final payment due in 180 days from now. If interest is 5.5% annually, determine the value of the final payment if the focal point is 180 days from now.

• A) $5,220.67
• B) $5,207.38
• C) $5,163.45
• D) $5,119.80
• E) $5,087.63

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Definitions:

Productivity Growth

An increase in the efficiency of production activities, enabling more output to be produced from the same amount of inputs.

Research and Development

The investigative activities a business conducts to improve existing products and procedures or to lead to the development of new products and procedures.

GDP Statistics

Quantitative data that measure the output of a country's economy, indicating economic health and progress by tracking changes in gross domestic product over time.

Standard of Living

A level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class in a certain geographic area.