Lotta Dough Just Won the State Lottery and Has Elected

question 8

Multiple Choice

Lotta Dough just won the state lottery and has elected to receive $50,000 per year for 20 years in the form of an annuity due. What is the present value of this stream of payments if money can earn 6 percent annual interest?

• A) $500,000
• B) $607,905
• C) $607,004
• D) $900,706

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Definitions:

Salivation

The involuntary production of saliva in the mouth, which can be stimulated by the anticipation of food or the presence of something to chew.

Amygdala

A part of the brain involved in emotion regulation, especially fear and pleasure responses.

Fear Response

An immediate alarm reaction triggered by the perception of imminent danger, real or perceived, characterized by physiological changes such as increased heart rate and adrenaline surge.

Dilation of Pupils

The expansion of the pupils of the eyes, which can occur in response to low light conditions or during states of arousal, excitement, or attraction.