What Is the Value Today of Receiving Five Annual Payments

question 9

Multiple Choice

What is the value today of receiving five annual payments of $500,000,beginning one year from now,assuming an 11% discount rate?

• A)$2,500,000.
• B)$2,225,000.
• C)$1,847,950.
• D)$2,115,270.

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Definitions:

Blemishes

Imperfections or marks on a surface or object that affect its appearance or quality.

Random Variable

A variable that varies based on the results of a chance event.

Average Value

The sum of all the values in a set divided by the number of values in the set.

Radar Equipment

Equipment designed to detect the presence, direction, distance, and speed of objects by using radio waves to bounce off the objects and return data.