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Question
Using only the information in the table below, approximately how much would you pay today for an investment that pays $0 annual interest, but earns 8% interest over the next four years and has a face value at maturity of $13,500?
Present Value Factor for Reversion of $1
| Period | 6% | 7% | 8% | 9% | 10% | ||
| 1 | .943396 | .934579 | .925926 | .917431 | .909091 | ||
| 2 | .889996 | .873439 | .857339 | .841680 | .826446 | ||
| 3 | .839619 | .816298 | .793832 | .772183 | .751315 | ||
| 4 | .792094 | .762895 | .713503 | .708425 | .683013 | ||
| 5 | .747258 | .712986 | .680583 | .644931 | .620921 | ||
| 6 | .704961 | .666643 | .630170 | .596267 | .564474 |
A) $8,000
B) $9,000
C) $10,000
D) $11,000
Answer
This answer is hidden. It contains 19 characters.
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