What Is the Present Value (PV)of an Investment That Pays

question 88

Multiple Choice

What is the present value (PV) of an investment that pays $10,000 every year for four years if the interest rate is 7% APR,compounded quarterly?

• A)$33,730
• B)$33,872
• C)$38,680
• D)$40,000

Identify the characteristics and benefits of Roth IRAs and their role in retirement planning.

Understand the original intent of Social Security and its role in a comprehensive retirement plan.

Grasp the concept of inflation and its impact on retirement planning.

Recognize the types of defined-contribution and defined-benefit plans and their significance for retirement savings.

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Definitions:

Operating Income

Income generated from the normal business operations of a company, excluding expenses such as interest and taxes.

DuPont Formula

A formula that breaks down Return on Equity (ROE) into three components: profit margin, asset turnover, and financial leverage, to analyze a company's financial performance.

Profit Margin

Profit margin is a financial metric showing the percentage of revenue that remains as profit after all operating expenses are deducted from sales.

Investment Turnover

A ratio that measures the efficiency of a company’s use of its assets in generating sales or revenue; the ratio of net sales to average total assets.