What Is the Present Value (PV)of $50 000 Received 20

question 32

Multiple Choice

What is the present value (PV) of $50 000 received 20 years from now, assuming the interest rate is 4% per year?

• A)$22 819.35
• B)$40 000.00
• C)$10 000.00
• D)$5 242.88

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Definitions:

Retention Ratio

The proportion of net income that is retained in the business rather than paid out to shareholders, indicating the company's reinvestment rate.

Dividend Yield

A stock’s cash dividend divided by its current price.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Reverse Stock Split

A corporate action in which a company reduces the total number of its outstanding shares to increase its share price.