The Present Value of an Annuity That Pays $1 Million

question 43

Multiple Choice

The present value of an annuity that pays $1 million per year for n years,is $9 million.If the interest rate is 5% per annum,n is approximately equal to how many years?

• A)45 years
• B)8 years
• C)11 years
• D)16.5 years
• E)12.25 years

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Definitions:

Profit-Maximizing

A strategy where a firm determines the price and production level that yields the highest possible profit.

Loss-Minimizing

A strategy aimed at reducing the negative impacts of business operations, often by cutting costs or improving efficiency.

Differentiated Product

Goods or services that are distinguished from similar products by characteristics like quality, design, brand, or attributes.

Monopolistically Competitive Industry

A market structure characterized by many firms selling products that are similar but not identical, allowing for significant product differentiation.