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Steve and Ed Are Cousins Who Were Both Born on the Same

question 114

Multiple Choice

Steve and Ed are cousins who were both born on the same day,and both turned 25 today.Their grandfather began putting $2,500 per year into a trust fund for Steve on his 20th birthday,and he just made a 6th payment into the fund.The grandfather (or his estate's trustee) will make 40 more $2,500 payments until a 46th and final payment is made on Steve's 65th birthday.The grandfather set things up this way because he wants Steve to work,not be a "trust fund baby," but he also wants to ensure that Steve is provided for in his old age.
Until now,the grandfather has been disappointed with Ed,hence has not given him anything.However,they recently reconciled,and the grandfather decided to make an equivalent provision for Ed.He will make the first payment to a trust for Ed today,and he has instructed his trustee to make 40 additional equal annual payments until Ed turns 65,when the 41st and final payment will be made.If both trusts earn an annual return of 8%,how much must the grandfather put into Ed's trust today and each subsequent year to enable him to have the same retirement nest egg as Steve after the last payment is made on their 65th birthday?

Definitions:

Effect Size

A quantitative measure of the magnitude of a phenomenon or the strength of the relationship between variables.

Meta-Analysis

A statistical technique that combines the results of multiple scientific studies to arrive at a comprehensive conclusion, increasing the power and precision of the findings.

High Correlation

Indicates a strong relationship between two variables, where changes in one are closely associated with changes in the other.

Independent Variable

An independent variable is a factor in research that is manipulated or changed by the researcher to observe its effects on the dependent variable.