Of the Following Investments, Which Would Have the Lowest Present

question 8

Multiple Choice

Of the following investments, which would have the lowest present value? Assume that the effective annual rate for all investments is the same and is greater than zero.

• A) Investment A pays $250 at the end of every year for the next 10 years (a total of 10 payments).
• B) Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20 payments).
• C) Investment C pays $125 at the beginning of every 6-month period for the next 10 years (a total of 20 payments).
• D) Investment D pays $2, 500 at the end of 10 years (just one payment).
• E) Investment E pays $250 at the beginning of every year for the next 10 years (a total of 10 payments).

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Definitions:

Intellectual Assets

Intangible resources and knowledge that a company possesses, which can include patents, trademarks, business methodologies, and other forms of intellectual property that provide a competitive advantage.

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Denotes a military or organizational capability designed and utilized to achieve strategic objectives, often involving long-range or significant impact operations.

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An individual who excels in making choices by identifying and considering all possible options and outcomes, leading to the best possible solution.