You Are Willing to Pay $15,625 to Purchase a Perpetuity

question 34

Multiple Choice

You are willing to pay $15,625 to purchase a perpetuity which will pay you and your heirs $1,250 each year,forever.If your required rate of return does not change,how much would you be willing to pay if this were a 20-year,annual payment,ordinary annuity instead of a perpetuity?

• A) $10,342
• B) $11,931
• C) $12,273
• D) $13,922
• E) $17,157

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Definitions:

Perceptual Selection

The process by which individuals filter, select, and interpret sensory information to create a meaningful picture of the world.

Safety Standards

Regulations and procedures put in place to ensure the health and safety of individuals in the workplace or public areas.

Perceptual Selection

The process by which individuals screen and select various stimuli in their environment to process and interpret.

Internal Factor

Elements or forces within an individual, such as personal skills, emotions, or beliefs, that influence their actions or decisions.