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Multiple Choice Questions: Question 1: If the single amount of $5,000 is to be received in 3 years and discounted at 6%, its present value
Multiple Choice Questions: Question 1: If the single amount of $5,000 is to be received in 3 years and discounted at 6%, its present value is A) $4,198. B) $4,717. C) $4,333. D) $4,700. Answer: Question 2: Which of the following discount rates will produce the smallest present value? A) 4% B) 8% C) 9% D) 10% Answer: Question 3: Suppose you have a winning lottery ticket and you are given the option of accepting $5,000,000 three years from now or taking the present value of the $5,000,000 now. The sponsor of the prize uses a 6% discount rate. If you elect to receive the present value of the prize now, the amount you will receive is A) $4,198,100. B) $4,319,200. C) $4,450. D) $5,000,000
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