Assume That You Will Receive R2,000 a Year in Years

question 5

Multiple Choice

Assume that you will receive R2,000 a year in Years 1 through 5, R3,000 a year in Years 6 through 8, and R4,000 in Year 9, with all cash flows to be received at the end of the year.If you require a 14 percent rate of return, what is the present value of these cash flows?

• A) R9,851
• B) R13,250
• C) R11,714
• D) R15,129
• E) R17,353

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Definitions:

Long-Term Care Insurance

Insurance coverage designed to provide for the cost of long-term care services, including nursing home care, assisted living, or home caregiver services, potentially offering tax deductions for premiums paid.

Medical Expenses

Costs associated with the diagnosis, cure, mitigation, treatment, or prevention of disease, and expenses for treatments affecting any part of the body, potentially tax-deductible.

Deductible

An expense that can be subtracted from adjusted gross income to reduce taxable income, thereby lowering tax liability.

Investment Interest Expense

Interest paid on money borrowed to purchase or held for investment purposes, which can be deducted to reduce taxable income under certain conditions.