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What is the present value of receiving $1,950 a year for 30 years if you expect a rate of return of 6% a year? Group of answer choices $975 $242 $340 $124

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14EA: How much must be invested now to receive $30,000 for 10 years if the first $30.000 is received one...

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Question

What is the present value of receiving $1,950 a year for 30 years if you expect a rate of return of 6% a year?

Group of answer choices

$975

$242

$340

$124

it has to be one of the above answers.

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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