You Are Considering the Purchase of an Investment That Would

question 14

Multiple Choice

You are considering the purchase of an investment that would pay you $5,000 per year for Years 1-5, $3,000 per year for Years 6-8, and $2,000 per year for Years 9 and 10. If you require a 14 percent rate of return, and the cash flows occur at the end of each year, then how much should you be willing to pay for this investment?

• A) $15,819.27
• B) $21,937.26
• C) $32,415.85
• D) $38,000.00
• E) $52,815.71

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Definitions:

Compensation System Designing

The process of establishing and creating a structured pay and benefits package for employees within an organization.

Total Level of Compensation

The complete range of financial and non-financial rewards provided to an employee, including salary, bonuses, benefits, and perks.

Mix Choices

The selection of a variety of options or components in a particular plan or strategy, allowing for customization and flexibility.

Group Performance Pay Plan

A compensation plan where a group of employees receives bonuses or pay based on the collective performance of the group.