Which of the Following Investments Would Have the Highest Future

question 43

Multiple Choice

Which of the following investments would have the highest future value (in year 5) if the discount rate is 12%?

• A) A five year ordinary annuity of $100 per year.
• B) A five year annuity due of $100 per year.
• C) $700 to be received at year 5
• D) $500 to be received TODAY (year 0)

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Definitions:

Exchange Differences

Gains or losses resulting from the conversion of foreign currency transactions into the functional currency of a business.

Equity

The value of an owner's interest in a property, calculated by subtracting liabilities from the value of an asset.

Functional Currency

The currency of the primary economic environment in which an entity operates and carries out its transactions.

Presentation Currency

The currency in which financial statements are presented. This may differ from the functional currency in which transactions are recorded.