You have been offered a project paying $300 at the beginning of each year for the next 20 years.The first payment occurs at the beginning of the first year.What is the maximum amount of money you would invest in this project if you expect 9 percent rate of return to your investment? (Round to the nearest whole dollar)
A) $2,738
B) $2,985
C) $15,347
D) $6,000

Question

Quizplus · Accepted Answer

PV = PMT × 11ea7fdb_fc1b_14dc_a768_dd0e82e46574_TB2902_11 × (1 + i)
PV = 300 × 11ea7fdb_fc1b_14dd_a768_099718f36baf_TB2902_11 × (1.09) = $2,985.03
Using a financial calculator:
N = 20, I/Y = 9, PMT = -300, FV = 0, cpt PV = $2,738.56
2,738.56 × 1.09 = $2,985.03

You Have Been Offered a Project Paying $300 at the Beginning