What Is the Present Value of a 5-Year Ordinary Annuity

question 93

Multiple Choice

What is the present value of a 5-year ordinary annuity with annual payments of $200,evaluated at a 15 percent interest rate?

• A) $670.43
• B) $842.41
• C) $1,169.56
• D) $1,348.48
• E) $1,522.64

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Definitions:

Long-Run Equilibrium

A situation in economic analysis where all inputs can be adjusted, and firms have no incentive to enter or exit the industry.

Economic Profit

The total revenue minus total costs, including both explicit and implicit costs.

Competitive Market

A market structure characterized by a large number of sellers and buyers, where no single party can dictate prices or market conditions.

Price-Taker Industry

An industry in which individual firms have no control over the price set by the market and must accept the prevailing price.