The Present Value of $1,000 Received Three Years from Today

question 30

True/False

The present value of $1,000 received three years from today with a discount rate of 10% is less than the present value of a $500 annuity with the same discount rate over the same period.
The three-year annuity represents three payments of $500 (= $1,500),so the present value of the annuity is greater.

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Definitions:

Rising

An increase or upward trend in value, quantity, or importance.

Average Variable Cost

The total variable cost divided by the number of units produced, representing the variable cost per unit of output.

Average Fixed Cost

The fixed costs (costs that do not change with the level of output) of producing a good or service, divided by the quantity of output produced.

Total Cost

The entire cost of production, including both fixed and variable costs.