Of the Last 100 Customers Entering a Computer Shop, 25

question 97

Multiple Choice

Of the last 100 customers entering a computer shop, 25 have purchased a computer. If the classical method for computing probability is used, the probability that the next customer will purchase a computer is

• A)0.25
• B)0.50
• C)1.00
• D)0.75

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Definitions:

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows, influencing investment decisions and valuation.

Compounded Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.

Effective Annual Rate

The real interest rate on an investment or loan, taking into account the effect of compounding interest as opposed to just the nominal or stated rate.

Compounded Monthly

Interest on a loan or investment calculated monthly on both the initial principal and the accumulated interest from previous periods.