What's the Present Value of a Perpetuity That Pays $250

question 156

Multiple Choice

What's the present value of a perpetuity that pays $250 per year if the appropriate interest rate is 5%?

• A) $4,750
• B) $5,000
• C) $5,250
• D) $5,513
• E) $5,788

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Definitions:

Expected Times

Probabilistic estimates of the time durations in which certain events are anticipated to occur.

Chi-Square Test

A statistical test used to examine the differences between categorical variables in a contingency table.

Right-Tailed

Refers to a type of hypothesis test where the area of interest is in the right tail of the probability distribution, usually testing for values greater than a certain number.

Uniformly Distributed

A statistical distribution where all outcomes are equally likely; each variable has the same probability.