A 15-Payment Annual Annuity Has Its First Payment in Nine

question 10

Multiple Choice

A 15-payment annual annuity has its first payment in nine years. If the payment amount is $1,400 and the interest rate is 7 percent,what is the most you should be willing to pay today for this investment?

• A)$5,825.11
• B)$12,751.08
• C)$6,416.67
• D)$7,421.24
• E)$6,935.74

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Definitions:

Measurable Factors

Quantifiable elements that can be used to evaluate performance, effectiveness, or success in various contexts.

Superstar Phenomenon

The tendency for small differences in talent or output to translate into large differences in recognition and earnings, particularly seen in sports and entertainment industries.

Supply Curve

A graph illustrating the relationship between the price of a good and the quantity of that good that producers are willing to supply.

Earn Per Hour

The rate at which an individual is compensated financially for each hour of work.