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Free_Kalibri [48]
3 years ago
5

Which of the following investments would have the lowest present value? Assume that the effective annual rate for all investment

s is the same and is greater than zero. Group of answer choices Investment E pays $250 at the beginning of every year for the next 10 years (a total of 10 payments). Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20 payments). Investment A pays $250 at the end of every year for the next 10 years (a total of 10 payments). Investment D pays $2,500 at the end of 10 years (just one payment). Investment C pays $125 at the beginning of every 6-month period for the next 10 years (a total of 20 payments).
Business
1 answer:
nekit [7.7K]3 years ago
5 0

Answer:

Investment D would have the lowest present value

Explanation:

A is smaller compared to E, This is because the money comes in later

The same argument holds for B and C, that is, B is lower compared to C because the money comes in later too.

A is also lower than B, this is because  of the annuity to be received later is larger.

D is just one payment, which means D is the right answer compared to A

This means investment D would have the lowest present value compared to all other investment choices.

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Answer:

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