Your Subscription to BusinessWeek Is About to Expire

question 23

Multiple Choice

Your subscription to BusinessWeek is about to expire. You plan to subscribe to the magazine for the rest of your life. You can renew it by paying $50 annually, beginning immediately, or you can get a lifetime subscription for $500, also payable immediately. Assuming that you can earn 6.525% on your funds and that the annual renewal rate will remain constant, how many years must you live to make the lifetime subscription the better buy?

• A) 12
• B) 15
• C) 10
• D) 18

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Definitions:

Financial Statement Transparency

The clarity, accuracy, and completeness with which a company's financial situation, performance, and changes are reported in its financial statements.

Earnings Manipulation

The act of altering financial statements to present a more favorable financial picture than reality, often through aggressive accounting practices.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the principal, paid by borrowers for the use of funds.

Market Value

The price at which an asset would trade in a competitive auction setting, reflecting its value to buyers and sellers.