Cassandra Needs to Compare the Present Value of Two Annuities

question 53

Multiple Choice

Cassandra needs to compare the present value of two annuities that she invested in ten years ago.In the first annuity,she invested $40,000 at a PV factor of 6% and in the second annuity she invested $60,000 at a PV of 20%.
Required:
Compute the present value of each annuity.Use Table 4 to find your values.

• A)$64,000;$102,000
• B)$82,000;$112,000
• C)$294,400;$251,520
• D)$362,200;$481,300
• E)$273,200;$340,000

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Definitions:

Unused Debt Capacity

Refers to the additional amount of debt a company can incur and still be within its targeted financial ratios.

Cash Flow

The complete sum of funds moving into and out of a company, particularly influencing its ability to meet short-term obligations.

Merger

A strategic move where two or more companies combine their operations, assets, and financials into a single entity, often to expand market share or capabilities.

Mutual Funds

Investment vehicles that pool money from various investors to purchase a diversified portfolio of stocks, bonds, or other securities.