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 every year for the next 10 years (a total of 10 payments).
B. Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20 payments).
C. Investment C pays $125 at the beginning of every 6-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 every year for the next 10 years (a total of 10 payments).
Answer: D
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