Which One of the Following Would Have the Greatest Value

question 59

Multiple Choice

Which one of the following would have the greatest value assuming each has a Year 0 cash flow of zero and a Year 1 annual cash flow of $100? Assume a discount rate of 8 percent,compounded annually.Also,assume any growth rate is positive.

• A)Perpetuity
• B)Annuity
• C)Growing perpetuity
• D)Growing annuity
• E)Growing perpetuity or growing annuity,as they would have equal values

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Definitions:

North Atlantic Treaty Organization

A military alliance formed in 1949 comprising North American and European countries to provide collective defense against aggression.

United States, Canada, and Mexico

These are countries in North America, often referenced together in the context of trade agreements or geographical proximity.

Free-Trade Agreement

A pact between two or more nations to reduce barriers to imports and exports among them, fostering international trade.

Tariffs

Taxes imposed by a government on imported goods, often used to protect domestic industries from foreign competition.