How Much Must Be Invested Today in Order to Generate

question 77

Multiple Choice

How much must be invested today in order to generate a 5-year annuity of $1,000 per year,with the first payment 1 year from today,at an interest rate of 12%?

• A) $3,604.78
• B) $3,746.25
• C) $4,037.35
• D) $4,604.78

---

Definitions:

Income Statement

A financial document that reports a company's financial performance over a specific accounting period, detailing revenue, expenses, and profits.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholders' equity at a specific point in time.

Ending Inventory

The total value of a company's merchandise or goods that have not been sold at the end of an accounting period.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, prior to any purchases or sales.