How Much More Would You Be Willing to Pay Today

question 79

Multiple Choice

How much more would you be willing to pay today for an investment offering $10,000 in 4 years rather than the normally advertised 5-year period? Your discount rate is 8%.

• A) $544.47
• B) $681.48
• C) $740.74
• D) $800.00

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Definitions:

Data

Information collected for reference or analysis, often numerical in nature, used to calculate or demonstrate patterns.

Squared Deviation

The square of the difference between an observed value and the mean, used in statistical analysis to measure variance.

Mean

The arithmetic average of a set of values, calculated by summing all the values and then dividing by the number of values.

Variance

A measure of the dispersion or spread of a set of data points around their mean value.