Salvatore Has the Opportunity to Invest in a Scheme Which

question 63

Multiple Choice

Salvatore has the opportunity to invest in a scheme which will pay $5 000 at the end of each of the next 5 years. He must invest $10 000 at the start of the first year and an additional $10 000 at the end of the first year. What is the present value of this investment if the interest rate is 4%?

• A)$1 248.56
• B)-$1 410.67
• C)$2 643.73
• D)-$112.23

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Definitions:

Budgeted Monthly Sales

An estimation of the sales revenue that a business expects to achieve in a particular month.

Other Payments

Refers to miscellaneous or additional payments that are outside the regular or expected transactions.

Cash Conversion Cycle

An index quantifying the period a business needs to turn its investments in inventory and other assets into cash flows generated through sales.

Accounts Receivable

Accounts Receivable refers to the money owed to a company by its customers for goods or services that have been delivered but not yet paid for.