Which of the following investments 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).
E) Investment E pays $250 at the beginning of every year for the next 10 years (a total of 10 payments).

Question

Quizplus · Accepted Answer

?A is smaller than E and B is smaller than C because the money comes in later.A is smaller than B because a larger annuity is received later.So,now the choice comes down to either A or D.Since all of D is received at the end,this is the logical choice.We could also do these calculations to answer the question: 11ea856c_8bde_fbf7_9aec_adcb852a83f4_TB1222_00

Which of the Following Investments Would Have the Lowest Present