Suppose the Interest Rate Is 5% and That You Are

question 9

Short Answer

Suppose the interest rate is 5% and that you are to receive three annual payments of $10,000, with the first payment one year from now, the second payment two years from now, and the third payment three years from now. What is the present value of this stream of payments?

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Definitions:

Nocebo Effect

Adverse effect of a placebo.

Negative Effect

An adverse or undesirable outcome resulting from a particular action or condition.

Placebo Study

A research experiment in which the effects of a substance or treatment are compared with those of a placebo, a harmless pill or procedure, to assess the treatment's effectiveness.

Placebo Effect

A beneficial effect that cannot be attributed to the properties of a placebo itself, and must therefore be due to the patient's belief in the treatment.