Scenario 15.5: Consider the Following Information Based on a Story by Hubert

question 5

Multiple Choice

Scenario 15.5:
Consider the following information based on a story by Hubert B. Herring that appeared in The New York Times on Catherine has a two-pack-a-day cigarette habit. Cigarettes cost about $2 per pack. Catherine is 20. On a $250,000 life insurance policy, her annual premiums are $1200; a non-smoker's would be $500. Smokers earn from 4 to 8 percent less in income than non-smokers (lower productivity and more absence, among other things) . In this case Catherine's income is expected to be $20,500 per year over her lifetime whereas $22,000 is an average non-smoker's salary. Let interest rates are expected to be 3%.
-Refer to Scenario 15.5. What formula shows the present value of the amount Catherine would save on life insurance premiums over her lifetime by stopping smoking?

• A) $700 times 60
• B) $700 (1 + 1/1.03 + 1/1.03² + 1/1.03³ + ... + 1/1.03⁶⁰)
• C) $700 (1 + 1/1.03 + 1/1.03² + 1/1.03³ + ... + 1/1.03⁸⁰)
• D) $42,000 / (1 + 1.03 + 1.03² + ... + 1.03⁶⁰)
• E) $42,000 / (1 + 1.03 + 1.03² + ... + 1.03⁸⁰)

Understand the concept of legal precedents and their role in the common law system.

Comprehend the basic structure and principles underpinning the U.S. Constitution, including its limits and powers.

Explore the relevance and application of legal concepts to various roles and functions within a business setting.

Identify the types and sources of law in the United States.

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Definitions:

Hierarchical Power

A form of power distribution where authority is ranked in levels from the top down, with each level having control over levels below.

Social Roles

The expected behavior patterns attributed to someone occupying a given position in a social unit.

Individualistic Countries

Nations that prioritize the values and rights of the individual over the interests of the group, often emphasizing personal independence and achievement.

Hierarchically Structured

Organized in a way that ranks constituents or elements in levels of importance or authority, often found in organizations, systems, or biological classifications.