If the Interest Rate Is 17%, and Will Remain 17

question 11

Multiple Choice

If the interest rate is 17%, and will remain 17% forever, how much would a rational investor be willing to pay for an asset that will pay him 7,020 dollars 1 year from now, 1,368 dollars 2 years from now, and nothing at any other time?

• A)7,000 dollars
• B)6,000 dollars
• C)41,176.47 dollars
• D)126,000 dollars
• E)8,000 dollars