Refer to Scenario 15.4. The present value of the electricity bill savings you will receive over the next 10 years is:

A) $200 times 10.
B) $200/1.06.
C) $200/1.06¹⁰.
D) $200 (1 + 1/1.06 + 1/1.06² + ... + 1/1.06⁹) .
E) $200 / (1 + 1/1.06 + 1/1.06² + ... + 1/1.06⁹) .

Question

Roshan singh · Accepted Answer

Final Answer : D, Explanation :  The correct answer is D because it represents the present value of an annuity formula, which is used to calculate the present value of a series of future payments ($200 annual savings) discounted back to their present value at a specific rate of interest (6%). This formula accounts for the time value of money over the 10-year period.

Refer to Scenario 15.4. The present value of the electricity bill savings you will receive over the next 10 years is:

A) $200 times 10.
B) $200/1.06.
C) $200/1.06¹⁰.
D) $200 (1 + 1/1.06 + 1/1.06² + ... + 1/1.06⁹) .
E) $200 / (1 + 1/1.06 + 1/1.06² + ... + 1/1.06⁹) .

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Learning Objectives

Related questions

Refer to Scenario 15.4. The present value of the electricity bill savings you will receive over the next 10 years is:A) $200 times 10.B) $200/1.06.C) $200/1.0610.D) $200 (1 + 1/1.06 + 1/1.062 + ... + 1/1.069) .E) $200 / (1 + 1/1.06 + 1/1.062 + ... + 1/1.069) .

Definitions

Learning Objectives

Learning Objectives

Related questions

Refer to Scenario 15.4. The present value of the electricity bill savings you will receive over the next 10 years is:

A) $200 times 10.
B) $200/1.06.
C) $200/1.06¹⁰.
D) $200 (1 + 1/1.06 + 1/1.06² + ... + 1/1.06⁹) .
E) $200 / (1 + 1/1.06 + 1/1.06² + ... + 1/1.06⁹) .