You Are Offered a Security That Will Pay You $2,500

question 51

Multiple Choice

You are offered a security that will pay you $2,500 at the end of the year forever.If your discount rate is 8%,what is the most you are willing to pay for this security?

• A) $26,686
• B) $62,500
• C) $50,000
• D) $31,250

---

Definitions:

Total Assets

The sum of all resources owned by an entity that are recognized as having economic value.

Net Income

The total profit of a business after all expenses and taxes have been deducted from total revenue.

Internal Growth Rate

The maximum rate at which a company can expand using only its own sources of funding without resorting to external financial options.

Constant Percentage

A fixed percentage rate applied to various mathematical and financial calculations.