Katie Is Going to Receive $1,000 Three Years from Now

question 117

Multiple Choice

Katie is going to receive $1,000 three years from now. Wilt is going to receive $1,000 five years from now. Which one of the following statements is correct if both Katie and Wilt apply a 5% discount rate to these amounts?

• A) The present value of Katie and Wilt's money is equal.
• B) The value of Wilt's money will be greater than the value of Katie's money six years from now.
• C) In today's dollars, Wilt's money is worth more than Katie's.
• D) In five years, the value of Katie's money will be less than the value of Wilt's money.
• E) Katie's money is worth more than Wilt's money today.

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Definitions:

Delivery Schedule

A detailed plan specifying the timing and sequence for the distribution or arrival of goods and services.

Stimulus-response Model

A concept in psychology and marketing that describes how individuals respond to stimuli (external inputs) with predetermined reactions, useful in understanding consumer behavior.

Buyer Behavior

The study of how individuals make purchasing decisions and the factors influencing their choice of products or services.

Consumer Trends

Patterns or preferences in consumer behavior that indicate the direction in which the demand for products or services is moving.