The Present Value of $5,000 Per Year for Three Years

question 25

True/False

The present value of $5,000 per year for three years at 12% compounded annually is $12,009.
Calculation: $5,000 x 2.4018 = $12,009.

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Definitions:

Comparative Advantage

An economic theory that explains how countries or entities can gain by specializing in the production of goods and services they can produce more efficiently than others and trading for those they produce less efficiently.

Productivity

The measure of the efficiency of production, often quantified as the ratio of output to inputs used in the production process.

Opportunity Costs

The cost of an alternative that must be forgone in order to pursue a certain action; essentially, the benefits you could have received by taking an alternative action.

Produced Goods

Produced goods are items that have been manufactured or processed from raw materials, ready for sale or distribution.