You Receive $500 Today Which You Plan to Save for Two

question 193

Multiple Choice

You receive $500 today which you plan to save for two years.Also,in two years you will be given another $500.If the interest rate is 5 percent,what is the present value of the payment of $500 today and the $500 in two years?

• A)$500(1.05)² + $500/(1.05)²
• B)$500(1.05)² + $500
• C)$500 + $500/(1.05)²
• D)$500 + $500

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Definitions:

Customers' Preference

The inclination or predisposition of consumers towards certain products, services, or brands over others.

Blocking

A method used in experimental design to minimize the effects of nuisance variables by grouping units with similar characteristics.

Random Assignment

An experimental technique for assigning individuals to different groups in a study using randomization, ensuring that each participant has an equal chance of being assigned to any group.

Placebo

A safe medication or treatment recommended primarily for its mental comfort to the patient rather than its physical health benefits.