The Present Value of an Annuity That Pays $100 Each

question 11

True/False

The present value of an annuity that pays $100 each year indefinitely is $2,000 if the interest rate is 5 percent.

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Definitions:

Fair Value

A measurement of an asset's sale price, assuming a transaction between knowledgeable, willing parties in an arm's length transaction.

Directly Attributable Costs

Costs that can be directly linked to a specific asset, activity, or project, and thereby included in its cost base.

Assumes Liabilities

The process by which one party takes on the legal responsibility for the debts or obligations of another party.

Fair Values

The market value of selling an asset or the outlay for a liability transfer in a negotiated agreement among trading participants at the time of estimation.