Which of the Following Investments Would Have the Lowest Present

question 77

Multiple Choice

Which of the following investments would have the lowest present value? Assume that the effective annual rate for all investments is the same and is greater than zero.

• A) Investment A pays $250 at the end of every year for the next 10 years (a total of 10 payments).
• B) Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20 payments).
• C) Investment C pays $125 at the beginning of every 6-month period for the next 10 years (a total of 20 payments).
• D) Investment D pays $2,500 at the end of 10 years (just one payment).
• E) Investment E pays $250 at the beginning of every year for the next 10 years (a total of 10 payments).

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Definitions:

Electrophilic

Describes a chemical species that is attracted to electrons and tends to accept electrons during chemical reactions.

Nucleophilic Attack

The process by which a nucleophile forms a bond with a positive or partially positive atom in another molecule.

Organic Product

A chemical compound of organic origin or derived from living organisms.

Organic Product

Any compound containing carbon atoms that is produced from organic reactions involving organic compounds.