How Much Money Would Have to Be Invested Today, at 9

question 170

Multiple Choice

How much money would have to be invested today, at 9% compounded monthly in order to have $40,000 in seven years?

• A) $21,353.81
• B) $23,726.43
• C) $33,786.03
• D) $34,928.08
• E) $5,071.92

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Definitions:

Present Value of Annuity

The current worth of a stream of equal payments made at regular intervals, discounted at a specific interest rate.

Capital Investment Evaluation Methods

Techniques used to assess the value and potential return of investments a business makes in long-term assets, including net present value, return on investment, and payback period analysis.

Average Rate of Return on Investment

A financial metric that compares the amount of profit expected or gained from an investment relative to its cost.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment, calculated as the difference between the present value of cash inflows and the present value of cash outflows over a period of time.