Solve the Problem. -Suppose You Start Saving Today for a $20,000 Down Payment

question 129

Multiple Choice

Solve the problem.
-Suppose you start saving today for a $20,000 down payment that you plan to make on a house in 10 years. Assume that you make no deposits into the account after your initial deposit. The account
Has quarterly compounding and an APR of 3%. How much would you need to deposit now to
Reach your $20,000 goal in 10 years?

• A)$14,832.96
• B)$15,490.39
• C)$12,342.98
• D)$9495.49

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Definitions:

Representativeness Bias

A cognitive bias in decision-making where individuals judge probabilities or make judgments based on how much one thing resembles another, often leading to errors in assessment.

Conjunction Fallacy

A logical error where people wrongly assume that specific conditions are more probable than a single general one.

Framing Error

A cognitive bias where information is presented or perceived in a way that influences judgment and decision-making, potentially leading to incorrect conclusions or actions.

Representativeness Heuristic

A cognitive bias in decision-making where the likelihood of an event is estimated based on how much it resembles existing stereotypes or patterns.