You Are to Receive $75 Per Year Indefinitely

question 68

Multiple Choice

You are to receive $75 per year indefinitely. The market rate of interest for these types of payments is 8%. The price you would pay for this stream is:

• A) $9.38
• B) $81.00
• C) $93.75
• D) $937.50

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Definitions:

Commission

A fee paid for services, usually a percentage of the amount involved in a transaction or sale.

Normal Sales

Sales transactions that occur under regular business conditions, without special circumstances or discounts.

Percents

A mathematical term representing a fraction of 100, used to denote a portion or share of a total.

Decimals

Numerical values expressed using a decimal system, involving a point to separate the whole number from the fractional part.