What Is the Present Value of Monthly Payments of $1000

question 61

Multiple Choice

What is the present value of monthly payments of $1000 for 5 years followed by monthly payments of $500 for 10 years (first payment one month from now) if j₁₂ = 4.8%?

• A)$89,485.08
• B)$90,692.96
• C)$100,826.85
• D)$115,238.16

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Definitions:

M/D/1

A notation in queue theory representing a system with a single server, where arrivals are Markovian (Poisson process), service times are deterministically fixed, and there is one server.

Constant Service Time

A condition in queuing theory where the time required to serve each customer is the same and does not vary.

Units Arrive

Pertains to the process or moment when manufactured goods or inventory items reach a designated location, such as a warehouse.

M/M/1 Assumptions

A set of conditions that underlie the M/M/1 queue model, including that arrivals occur according to a Poisson process, service times have an exponential distribution, there is a single server, and the queue has infinite capacity.