Of the Following Investments, Which Would Have the Lowest Present

question 1

Multiple Choice

Of the following investments, which would have the lowest present value? Assume that the effective annual rate for all investments is the same and is greater than zero.

• A) Investment A pays $250 at the end of every year for the next 10 years (a total of 10 payments).
• B) Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20 payments).
• C) Investment C pays $125 at the beginning of every 6-month period for the next 10 years (a total of 20 payments).
• D) Investment D pays $2,500 at the end of 10 years (just one payment).
• E) Investment E pays $250 at the beginning of every year for the next 10 years (a total of 10 payments).

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Definitions:

Fermented Juice

A beverage produced from the bacterial or yeast-involved fermentation of fruit, typically grapes for wine.

Sensation

The process by which sensory receptors and the nervous system receive and represent stimuli from the environment.

Stimulus Energies

The physical energy forms, such as light and sound, that activate sensory receptors and contribute to sensory processing.

Sensory Receptors

Specialized cells or nerve endings that respond to changes in the environment by converting them into electrical signals sent to the brain.