Suppose You Have a Choice Between Receiving a Lump-Sum Payment

question 95

Multiple Choice

Suppose you have a choice between receiving a lump-sum payment of $10,000 today or four annual payments of $2,750 (with the first payment today) .Of the following,which is the lowest annual interest rate at which you would prefer the lump-sum payment over the four annual payments?

• A)2%
• B)​5%
• C)​7%
• D)​10%

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Definitions:

Ethiopia

A country located in the Horn of Africa, known for its ancient civilizations, independence from colonial rule, and diverse cultural heritage.

Empire

A group of countries or territories under the control of a single ruler or government, often having a vast geographical span.

Eastern Europe

Eastern Europe refers to the region encompassing the eastern part of the European continent, characterized by its distinct cultural, historical, and political attributes.

Tariff Barriers

Taxes imposed on imported goods to protect domestic industries from foreign competition and to raise government revenue.