David Has Purchased an Investment That He Expects to Produce

question 40

Multiple Choice

David has purchased an investment that he expects to produce an annual cash flow of $3,000 for five years. He requires an 8% rate of return compounded annually. What is the maximum amount that David can pay and still earn the required rate of return?

• A) $19,008
• B) $15,000
• C) $14,764
• D) $11,978