Two Payments of $49 000 Each Must Be Made 3

question 153

Multiple Choice

Two payments of $49 000 each must be made 3 year and 5 year from now. If money can earn 4.9% compounded monthly, what single payment 3 years from now would be equivalent to the two scheduled payments?

• A) $93 435
• B) $98 000
• C) $88 869
• D) $105 742
• E) $101 177

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Definitions:

Future Value

The value of a current asset at a specified date in the future, calculated using estimated rates of growth or return.

Growth Rate

The measure of the increase in size, number, value, or strength of a business or a segment of its operations over a specific period.

Earnings Per Share

A measure of a company's profitability, calculated as the company's net income divided by the total number of outstanding shares.

Double

An increase by 100% or a factor of two in a particular measure or quantity.