Scenario: Tom Has Two Investment Options

question 144

Multiple Choice

Scenario: Tom has two investment options. He can either invest $3,000 in a friend's project or he can deposit the same amount in a bank that offers him an annual rate of interest of 6 percent. If he invests in his friend's project, he will receive $3,400 after 5 years.
-Refer to the scenario above.What is the present value of $3,400 to be received after 5 years?

• A) $2,300.78
• B) $2,540.68
• C) $3,200.22
• D) $3,526.44

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Definitions:

Handwritten Words

Text or documentation produced through the act of writing by hand, as opposed to typed or digitally produced text.

Negotiable Instruments

Financial documents that guarantee the payment of a specific amount of money, either on demand or at a set time.

Paper Payable

A financial instrument or document that promises the payment of a specific amount of money either on demand or at a specified future date.

"On Demand"

Refers to the immediate availability or access to products, services, or financial transactions upon request.