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Present Value of an Annuity: Craymore Tech Is Expecting Cash

question 73

Multiple Choice

Present value of an annuity: Craymore Tech is expecting cash flows of $67,000 at the end of each year for the next five years. If the firm's discount rate is 17 per cent, what is the present value of this annuity? (Round to the nearest dollar.)


Definitions:

Deterrent

A factor or policy intended to discourage certain behaviors by instilling fear of the consequences.

Fractional Reserve

A banking system in which banks hold a fraction of the deposits as reserves, lending the rest to generate profit.

Reserves

Assets kept on hand by a bank or financial institution to meet emergency needs or regulatory requirements.

Transactions Demand

The demand for money for the purpose of carrying out transactions or day-to-day expenditures.

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