On January 1, 2013, You Are Considering Making an Investment

question 86

Multiple Choice

On January 1, 2013, you are considering making an investment that will pay three annual payments of $10,000. The first payment is not expected until December 31, 2016. You are eager to earn 3%. What is the present value of the investment on January 1, 2013?

• A)$28,286.
• B)$25,886.
• C)$26,662.
• D)$27,300.

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Definitions:

Financial Statements

Reports that summarize the financial activities and condition of a business or individual.

Liability

A financial obligation or amount owed by a company to creditors, employees, tax authorities, or other entities.

Unearned Fees

Income received by a business for services yet to be performed or delivered, recorded as a liability on the balance sheet until the services are completed.

Earned Fees

Revenue generated from providing services or performing work.