You Are Scheduled to Receive Annual Payments of $5,100 for Each

question 12

Multiple Choice

You are scheduled to receive annual payments of $5,100 for each of the next 7 years.The discount rate is 10 percent.What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year?

• A)$2,483
• B)$2,513
• C)$2,721
• D)$2,727
• E)$2,804

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Definitions:

Standard Error

The standard deviation of the sampling distribution of a statistic, most commonly the mean; it is used to estimate the efficiency, accuracy, or precision of a sample-based estimate.

Sample Mean

The average value of a sample set of numbers, calculated by adding all the values together and dividing by the number of values.

Sampling Distribution

The probability distribution of a statistic based on a large number of samples or replicates.

Probability Distribution

Describes how the probabilities are distributed over the values of a random variable.