Using an Interest Rate of 5%, Which Figure Has the Largest

question 35

Multiple Choice

Using an interest rate of 5%, which figure has the largest present value

• A)$5000.
• B)$5050 to be received two years from now.
• C)$5075 to be received three years from now.
• D)$5500 to be received ten years from now.

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Definitions:

Return On Investment

A measure of the profitability and efficiency of investment, calculated by dividing net profit by the initial capital cost.

Retirement

The phase of life where one stops full-time work and often receives income from savings, investments, and pensions.

Actuarial Calculations

Mathematical and statistical calculations used by actuaries to evaluate and manage risks and forecast future liabilities or premiums in insurance and finance.

Assumed Investment Rate

A projected or hypothetical rate of return on an investment over a specified period.