Liam Is Considering Putting Money in an Investment Plan That

question 11

Multiple Choice

Liam is considering putting money in an investment plan that will pay him $52,000 in 12 years. If Liam's opportunity cost rate is 7 percent compounded annually, what is the maximum amount he should be willing to pay for the investment today?

• A)$23,089
• B)$25,526
• C)$26,888
• D)$28,685
• E)$30,534

---

Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates the stock is more volatile than the market, while a beta less than 1 indicates less volatility.

Adjustment Technique

A method used in different contexts to correct or modify processes, values, or systems for a specific purpose, often for accuracy or improvement.

Regression Parameters

The coefficients in a regression equation that represent the relationship between the independent variables and the dependent variable.

Monthly Observations

Regularly recorded data points collected each month to analyze changes or trends over time.