After Receiving a Reward for Information Leading to the Arrest

question 73

Multiple Choice

After receiving a reward for information leading to the arrest of a notorious criminal, you are considering investing it in an annuity that pays $5,000 at the end of each year for 20 years.You could earn 5% on your money in other investments with equal risk.What is the most you should pay for the annuity?

• A) $50,753
• B) $53,424
• C) $56,236
• D) $59,195
• E) $62,311

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Definitions:

Affordable

Referring to something that is priced reasonably, within the financial means of most people.

R&D Spending

Expenditures devoted to research and development by governments, organizations, or companies to innovate new products and processes.

Future Expected Gains

The anticipated benefits or profits that are expected to be realized in the future from investments or decisions made today.

Present Expenditures

Current spending or outflows of money, usually referring to the costs or expenses a business or individual faces at the moment.