The Present Value of $1,000 Received at the End of Year

question 63

Multiple Choice

The present value of $1,000 received at the end of year 1, $1,200 received at the end of year 2, and $1,300 received at the end of year 3, assuming an opportunity cost of 7 percent, is

• A)$2,500.
• B)$3,043.
• C)$6,516.
• D)$2,856.

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Definitions:

Return on Investment

Return on Investment (ROI) measures the gain or loss generated by an investment relative to the amount of money invested.

Minimised

Reduced to the smallest possible size, amount, degree, or level.

Larger Scheme

A broader or more comprehensive plan or ambition that smaller actions or ideas contribute towards.

Expectancy Theory

A psychological theory proposing that individuals are motivated to act in certain ways based on their expectations of outcomes and the attractiveness of those outcomes.