You and your heirs will receive $35,000 per year forever, with the first payment received at the end of the first year. If the appropriate discount rate is 8%, what is the present value of your prize?

$32,407.41

Explanation:

Present value (PV)= C/(1+i)^n

C=amount of money to be discounted

n=number of periods

I=interest rate.

C= $35,000

n=1 year

I=8% or 0.08

PV= $35,000/(1+0.08)^1

= $35,000/1.08

=$32,407.41

answer; closing the loop;

the answer is: a greater percentage chance of loss

high risk investments had the characteristic of higher percentage of great return accompanied with higher percentage chance of loss.

this type of investments usually only suitable for investors that have enough capital to survive in case one or more of their investments fail. examples of high-risk investments are stocks and currencies.