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I Am Promised a Payment of $250 a Year from Now

Question 26

Multiple Choice

I am promised a payment of $250 a year from now, repeating every year for a total of ten years. I can invest money at 10% interest, but the inflation rate over the next ten years is expected to be 5%. What is the smallest amount of money you could offer me right now that would persuade me to give up these payments?


A) 250(P/A,0.05,10)
B) 250(P/A,0.15,10)
C) 250(A/P,0.1,10)
D) 250(P/A,0.155,10)
E) 250(P/A,0.165,10)

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