You Have Been Promised a Payment of $400 in the Future.In

question 99

Multiple Choice

You have been promised a payment of $400 in the future.In which case is the present value of this payment highest?

• A) You receive the payment 4 years from now and the interest rate is 4 percent.
• B) You receive the payment 4 years from now and the interest rate is 5 percent.
• C) You receive the payment 5 years from now and the interest rate is 4 percent.
• D) You receive the payment 5 years from now and the interest rate is 5 percent.

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Definitions:

IRS

The Internal Revenue Service, the U.S. federal agency responsible for administering and enforcing the tax laws and collecting federal taxes.

Tax Return

A form or forms filed with a government body reporting income, expenses, and other pertinent tax information, used to calculate tax liability.

Financial Statements

Formal records of the financial activities and condition of a business, person, or other entity, typically including a balance sheet, income statement, and cash flow statement.

Plant Assets

Long-term tangible assets used in the operation of a business and not expected to be consumed or converted into cash in the short term.