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 eyear for the next 10 years (a total of 10 payments).
B) Investment B pays $125 at the end of e6-month period for the next 10 years (a total of 20 payments).
C) Investment C pays $125 at the beginning of e6-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 eyear for the next 10 years (a total of 10 payments).

Question

Quizplus · Accepted Answer

Investment D has the lowest present value because it involves a single payment at the end of 10 years, which is discounted for the entire period, resulting in a lower present value compared to other investments with multiple payments over time.

Which of the Following Investments Would Have the Lowest Present