You Will Receive Annual Payments of $2,400 at the End

question 39

Multiple Choice

You will receive annual payments of $2,400 at the end of each year for 15 years.The first payment will be received in year 6.What is the present value of these payments if the discount rate is 7 percent?

• A)$11,465.20
• B)$12,018.52
• C)$13,299.80
• D)$15,585.16
• E)$16,856.60

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Definitions:

Income Disparity

The uneven distribution of income across different groups within a society.

First Mover

A company that gains a competitive advantage by being the first to market with a new product or service.

Theory of Absolute Advantage

An economic theory proposed by Adam Smith, which suggests that countries should specialize in the production of goods for which they have an absolute advantage.

Theory of Comparative Advantage

An economic principle stating that countries or entities benefit from specializing in and exporting goods for which they have a lower opportunity cost.