You Are to Receive $12,000 at the End of 5

question 38

Multiple Choice

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?

• A) present value of an annuity of $1
• B) future value of an annuity
• C) present value of $1
• D) compound sum of $1

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Definitions:

Rational

In accordance with the rules of effective thought concerning coherence, consistency, practicability, simplicity, comprehensiveness, looking at the evidence and weighing it carefully, not jumping to conclusions, and so on. Rationality may not guarantee truth; all the evidence and everything we believe may point to one conclusion, and yet later generations, who know things that we do not, may see that our conclusion was incorrect. It was rational thousands of years ago to believe that the earth was flat, even though it was not true. It is not rational for us to believe the same thing, for our evidence and all sorts of other beliefs indicate, rather, that it is rational to believe that the earth is (more or less) spherical.

Best Available Evidence

The most reliable and pertinent information and data available at the time to support a decision or conclusion.

Careful Thinking

The process of thinking in a judicious, meticulous manner, ensuring attention to detail and consideration of all aspects before forming a judgment or conclusion.

Tautologies

Statements that are true in all possible interpretations or scenarios, basically asserting the same thing in different words.