Question

"Ibiza Corporation invested $20,000 for the last four years in an investment that will pay the firm $120,000 at the end of this year. The $120,000 received at the end of this year is an example of a(n) _____."

Answer 1

Answer: Lump- sum amount

Explanation: The lump sum amount refers to the final payment that an investor receives when his or her investment matures. This is sometimes also referred to as maturity payment or balloon payment.

In a lump sum amount, the benefit of the investment is paid to the investor at one go and not on basis of a series of cash flows.

Hence, we can conclude that $120,000 is a lump sum payment.