Which of the Following Will Increase the Present Value of an Annuity

question 140

Multiple Choice

Which of the following will increase the present value of an annuity?

• A) The number of periods decreases.
• B) The interest rate decreases.
• C) The amortization schedule decreases.
• D) The effective rate is calculated over fewer years.

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Definitions:

Total Utility

The complete fulfillment experienced when a certain amount of products or services is consumed.

Utility Schedule

A utility schedule is a table that shows the relationship between quantities of a good or service consumed and the utility or satisfaction derived from that consumption.

Marginal Utility

The additional satisfaction or utility gained from consuming an extra unit of a good or service.

Total Utility

The overall satisfaction or benefit a consumer receives from consuming a certain quantity of a good or service.