ANSWERS TO QUESTIONS

Present value of an annuity of $1 at 5% for 10 years = 7.72173; thus the present value of ten payments of $400,000 is $3,088,692. The cost of the investment is $3,000,000; thus, only an $88,692 gain is recognized at 5%. ... or no maturity date (e.g., stock), and (2) cash equivalents are readily convertible to known amounts of cash whereas a ... ................
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