Lester's Just Signed a Contract That Will Provide the Firm

question 19

Multiple Choice

Lester's just signed a contract that will provide the firm with annual cash inflows of $28,000,$35,000,and $42,000 over the next three years with the first payment of $28,000 occurring one year from today.What is this contract worth today at a discount rate of 7.25%?

• A) $88,311.08
• B) $89,423.91
• C) $90,580.55
• D) $91,341.41

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Definitions:

Distance Cues

These are visual or auditory indicators that help an individual perceive how far away an object or sound is.

Invariant Relationship

A consistent, unchanging relationship or pattern under a particular set of conditions.

Distance Cue

Visual indicators that allow the perception of depth or distance, such as overlapping objects, size variation, and linear perspective.

Binocular Disparity

A depth cue based on the differences between the two eyes’ views of the world. This difference becomes less pronounced the farther an object is from the observer.