The Table Below Shows the Payments at the End of Each

question 21

Multiple Choice

The table below shows the payments at the end of each year from three different assets. $$\begin{array} { | l | c | c | c | c | } \hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \\\hline \text { A } & \$ 1000 & \$ 1000 & \$ 1000 & \$ X \\\hline \text { B } & \$ 1000 & \$ 0 & \$ 2000 & \$ Y \\\hline \text { C } & \$ 0 & \$ 2000 & \$ 1000 & \$ Z \\\hline \text { Interest Rate } & 5 \% & 6 \% & 5 \% & 7 \% \\\hline\end{array}$$ TABLE 15- 1
-Refer to Table 15- 1.A,B,and C are possible investment opportunities that expire at the end of Year 4,each offering a stream of payments as indicated in the table.The interest rates in each year are also specified in the table.Assuming that X,Y,and Z are zero,which investment is the most valuable if an investor contemplates them at the beginning of Year 1?

• A)A
• B)B
• C)C
• D)They are equivalent.
• E)It cannot be determined with the available data.

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Definitions:

Schemas

Cognitive structures or mental frameworks that help individuals organize and interpret information based on past experiences and knowledge.

Psychosocial Development

Refers to the theory by Erik Erikson that human development is a life-long process divided into eight stages, each characterized by a different psychological conflict that needs resolution.

Cognitive Development

The growth and change in intellectual/mental abilities such as thinking, reasoning, and understanding over the lifespan.

Attachment Theory

A psychological theory that describes the dynamics of long-term interpersonal relationships, focusing on how early attachments influence future emotional development.