If the Annual Interest Rate Is 9%, What Would You

question 23

Multiple Choice

If the annual interest rate is 9%, what would you expect to pay for a bond paying a lump sum of $10,000 in two years?

• A)$8,417
• B)$8,200
• C)$10,000
• D)$11,881

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Definitions:

Time Horizons

The length of time over which an investment is intended to be held or a financial goal is expected to be achieved.

Present Values

The contemporary valuation of a forthcoming sum of money or cash flows, based on a given rate of return.

Cash Inflows

Money entering a business from various sources, including sales, financing, and investment income.

Cash Outflows

Expenditures or payments made by a business, leading to a decrease in cash assets, including operational costs, investments, and financing activities.