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Calculate Which Has a Higher Present Value: an Annual Payment

question 68

Essay

Calculate which has a higher present value: an annual payment of $100 received over 3
years or an annual payment of $50 received over 7 years. In both cases the interest rate is 7% (or
0.07).


Definitions:

Critical Thinking

The objective analysis and evaluation of an issue or situation in order to form a judgment, emphasizing logical reasoning and evidence.

Code of Law

A systematic and comprehensive collection of laws, statutes, or regulations that govern a specific area or country.

Ethics

General principles of right and wrong, as opposed to requirements of law.

Professional Behavior

Conduct that is appropriate and expected in a work or business environment, often guided by ethics and standards.

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