You Are Currently at Time Period 0,and You Will Receive

question 88

Multiple Choice

You are currently at time period 0,and you will receive the first payment on an annual payment annuity of $100 in perpetuity at the end of this year.Six full years from now you will receive the first payment on an additional $150 in perpetuity,and at the end of time period 10 you will receive the first payment on an additional $200 in perpetuity.If you require a 10 percent rate of return,what is the combined present value of these three perpetuities?

• A) $2,349.50
• B) $2,526.85
• C) $2,685.42
• D) $2,779.58
• E) $2,975.40

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Definitions:

Promise

A declaration or assurance that one will do something or that a particular thing will happen.

Consent Order

Under the Federal Trade Commission Act, an order under which a company agrees to stop a disputed practice without necessarily admitting that the practice violated the law.

Private Cause

A legal action initiated by an individual or entity for personal reasons or grievances.

Unordered Merchandise

Goods sent to a person without their request, where the recipient is generally not legally obligated to pay for or return the items.