Consider an Investment That Pays $1000 Certain at the End

question 27

Multiple Choice

Consider an investment that pays $1000 certain at the end of each of the next four years.If the investment costs $3,500 and has a net present value (NPV) of $74.26,then the four year risk-free interest rate is closest to:

• A)4.5%
• B)4.58%
• C)4.55%
• D)4.53%
• E)5.0%

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Definitions:

Solvency

The ability of a company to meet its long-term financial obligations and continue its operations in the long term.

Accounting Standards

Principles that guide and standardize accounting practices to ensure financial statements are prepared consistently and transparently.

Evidential Matter

Evidential matter comprises all the documents, confirmations, and information gathered by auditors to substantiate their opinion on the financial statements' fairness.

Analysis Overview

A summary or brief outline that highlights the key points and findings of a detailed analysis.