An Investment Is Expected to Pay 7% Per Year Compounded

question 76

Multiple Choice

An investment is expected to pay 7% per year compounded continuously. If you want the value of the investment to be $600,000 after 25 years, how much should you invest initially? Round to the nearest dollar.

• A)$26,066
• B)$52,132
• C)$104,264
• D)$208,529
• E)$267,494

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Definitions:

Financial Arrangement

A financial arrangement is an agreement between parties regarding the management, transaction, or repayment of money, often detailing terms for loans, payments, or investments.

Hedging

A risk management strategy used to offset potential losses in investments by taking an opposite position in a related asset.

Price Fluctuations

Variations in the price levels of goods, services, or assets in a market over a period of time.

Financial Risk

Financial risk involves the potential of losing financial resources or assets due to business activities, including market fluctuations, credit risk, and liquidity risk.