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:

R-Square

A statistical measure that represents the proportion of the variance for a dependent variable that's explained by an independent variable or variables in a regression model.

Prediction Interval Estimate

A prediction interval estimate is a range of values that is likely to include the value of a single new observation predicated on the existing data set.

Confidence Interval Estimate

A range of values, derived from sample statistics, that is likely to contain the value of an unknown population parameter at a specified confidence level.

Average Regression Interval

Average regression interval describes the range within which the average value of the dependent variable falls, based on a linear regression model.