Use the Table for the Question(s) Below

question 7

Multiple Choice

Use the table for the question(s) below.
Suppose the term structure of interest rates is shown below:

-Consider an investment that pays $1000 certain at the end of each of the next four years.If the investment costs $3,500 and has an NPV of $74.26,then the four year risk-free interest rate is closest to:

• A) 4.5%
• B) 4.58%
• C) 4.55%
• D) 4.53%

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Definitions:

Taxation Principle

The guidelines governing how taxes should be levied on individuals and businesses in a fair and efficient manner.

Tax Revenue

The income that is gained by governments through taxation from individuals and businesses.

Economic Income

The total value of all income generated by the assets of an individual or organization, including both realized and unrealized gains.

Net Worth

The total value of an individual's or organization's assets minus their liabilities.