If the Interest Rate Is 17%, and Will Remain 17

question 11

Multiple Choice

If the interest rate is 17%, and will remain 17% forever, how much would a rational investor be willing to pay for an asset that will pay him 7,020 dollars 1 year from now, 1,368 dollars 2 years from now, and nothing at any other time?

• A)7,000 dollars
• B)6,000 dollars
• C)41,176.47 dollars
• D)126,000 dollars
• E)8,000 dollars

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Definitions:

Tree-Planting Firm

A company specializing in planting trees as part of reforestation efforts, environmental projects, or landscaping services.

Salaries

Regular payments made to employees, usually monthly or biweekly, in exchange for their labor or services, not typically dependent on hours worked.

Total Compensation

The complete package of salary, bonuses, benefits, and other forms of pay provided by an employer to an employee.

Paid Executives

High-level officers or managers within a company who are compensated with a substantial salary, bonuses, and often, benefits and stock options.