1. A court settlement awarded an accident victim four payments of $50,000 to be

Question

1. A court settlement awarded an accident victim four payments of $50,000 to be paid at the end of each of the next four years. Using a discount rate of 4%, calculate the present value of the annuity.

2.

Which form of business structure faces the greatest agency problems?

sole proprietorship

limited partnership

general partnership

corporation

                            
          

sole proprietorship

                            
          

limited partnership

                            
          

general partnership

                            
             

corporation

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Present Value of Annuity = 50000/(1+.04)^1 + 50000/(1+.04)^2 + 50000/(1+.04)^3 + 50000/(1+.04)^4 = 181494.76 or 181495

Part B:

Option D (Corporation) is the correct answer.

Thanks.

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