Uncle Roscoe, a Wealthy Relative, Has Given You a Choice

question 27

Multiple Choice

Uncle Roscoe, a wealthy relative, has given you a choice of receiving $10,000 today or $3,000 at the end of each year for the next four years. Which table factor(s) should be used to most efficiently determine the "value" of the $3,000 cash-flow stream?

• A) Future value of $1.
• B) Future value of a $1 annuity.
• C) Present value of $1.
• D) Present value of a $1 annuity.
• E) Both Present value of $1 and Present value of a $1 annuity.

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Definitions:

Stock Of Wealth

Refers to the total value of all assets owned by an individual, a company, or a country at a given point in time, excluding liabilities.

Intermediate Goods

Products used in the production process to make other goods and services but not sold directly to consumers.

Manufacture

The process of converting raw materials into finished goods through the use of labor, machines, and chemical processes.

Gross Domestic Product

The total value of all goods and services produced within a country in a specific time period.