Given a 4 Percent Interest Rate, Compute the Present Value

question 150

Multiple Choice

Given a 4 percent interest rate, compute the present value of deposits made in years 1, 2, 3, and 4 of $1,000, $1,200, $1,200, and $1,400.

• A) $4,103.06
• B) $4,334.53
• C) $4,615.38
• D) $4,804.00

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Definitions:

Payoffs

The returns or gains received from an investment or decision, which can vary based on different outcomes or scenarios.

Binary Options

Financial instruments that pay out either a fixed amount or nothing at all, depending on whether a certain condition is met at expiration, typically related to the price movement of a security.

Fixed Amount

A fixed amount refers to a specific quantity or sum of money that does not change over time, often used in financial contexts like investments, payments, or fees.

Specified Event

An occurrence or situation outlined within a contract that triggers certain actions or conditions, often used in insurance and derivatives contracts.