Margaret Will Receive an Insurance Settlement of $3,000,000 in Five

question 4

Multiple Choice

Margaret will receive an insurance settlement of $3,000,000 in five years. Randall is willing to give her a lump sum today in return for the payment in five years. If current interest rates are 12% per year, how much will Margaret receive today?

• A) $960,637
• B) $1,702,281
• C) $1,116,790
• D) $1,800,000

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Definitions:

Objective Right

A principle or standard of behavior that is universally accepted as correct or moral, independent of individual thought or opinion.

Ambiguity

The quality of being open to more than one interpretation; inexactness.

Conformity Effect

The tendency of individuals to align their attitudes, beliefs, and behaviors with those of a group.

Outnumbered

Being in a situation where the number of individuals on one side is considerably less than those on the opposing side, often leading to a disadvantageous position.