Of the following investments, which 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). Which of the answers is right?
Of the following investments, which 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). Which of the answers is right?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 16P
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Of the following investments, which would have the lowest
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).
Which of the answers is right?
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