Assume That the Desired Rate of Return Is 10% and That

question 74

Multiple Choice

Assume that the desired rate of return is 10% and that interest is compounded annually. Identify how much must be invested today to have $10,000 in 5 years and 10 years, respectively.

• A) $1,000; $5,000
• B) $5,000; $1,000
• C) $3,791; $6,145
• D) $6,209; $3,855

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Definitions:

Complement

In probability theory, the complement of an event is the set of all outcomes that are not in the event.

Event A

A specified occurrence or outcome, often used in probability and statistics to denote a specific set of results within an experiment.

Sample Space

The collection of all potential results or outcomes from a probabilistic experiment.

Discrete Random Variables

Random variables that take on a countable number of distinct values.