What Is the Maximum Amount an Investor Should Be Willing

question 50

Multiple Choice

What is the maximum amount an investor should be willing to pay for a two-year $200 annuity, if the best alternative investment earns 20 percent per annum?

• A)$305.56
• B)$166.67
• C)$138.89
• D)$268.79

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Definitions:

Critical Numbers

Critical numbers of a function are values of the variable at which the derivative of the function is 0 or undefined.

Horizontal Distance

Represents the straight-line distance between two points on a plane, measured along a line parallel to the horizontal axis.

Ground

Often refers to the reference point in an electrical circuit from which voltages are measured, a common return path for electric current, or a direct physical connection to the Earth.

Perimeter

The total distance around the edge of a geometric figure or shape.