What Is the Value of an Asset Which Pays $200

question 128

Essay

What is the value of an asset which pays $200 a year for the next 5 years (the first payment comes one year from today)and can be sold for $1,500 after 5 years? Assume that the opportunity cost is 10 percent.

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Definitions:

Expectancy

The probability that the amount of work effort invested by an individual will result in a high level of performance.

Instrumentality

The probability that good performance will lead to various work outcomes.

Difficult Goals

Targets or objectives that are challenging to achieve due to their complexity, high standards, or the significant efforts required.

Specific Goals

Clearly defined objectives that are quantifiable and time-bound, providing clear direction for effort and focus.