An Annuity Pays $10 Per Year for 98 Years

question 18

Multiple Choice

An annuity pays $10 per year for 98 years. What is the present value (PV) of this annuity given that the discount rate is 7%?

• A) $85.60
• B) $171.20
• C) $142.67
• D) $199.74

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Definitions:

Speculators

Individuals or entities who attempt to profit from the anticipation of price movements in a market, often taking on risks in the process.

Exchange Rate

The price at which one currency can be exchanged for another, influencing international trade and investment.

Speculative Activity

Trading or investment practices that are high-risk, aiming for substantial profits based on predictions of market movements.

Currency Decline

Currency decline refers to the decrease in the value of a country's currency in relation to foreign currencies, leading to higher prices for imported goods and affecting international trade balance.