If It Were Evaluated with an Interest Rate of 0

question 79

Multiple Choice

If it were evaluated with an interest rate of 0 percent,a 10-year regular annuity would have a present value of $3,755.50.If the future (compounded) value of this annuity,evaluated at Year 10,is $5,440.22,what effective annual interest rate must the analyst be using to find the future value?

• A) 7%
• B) 8%
• C) 9%
• D) 10%
• E) 11%

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Definitions:

Dedicated Resources

Assets or inputs allocated specifically for a particular project, task, or goal without being diverted elsewhere.

Costs

The monetary value of resources consumed or spent to achieve a particular objective.

Benefits

Advantages or positive outcomes that result from a particular action or policy.

Free Rider Problem

A situation where individuals consume a public good without contributing to its cost, benefitting from others' contributions.