Don Wants to Know How Much He Needs to Save

question 52

Multiple Choice

Don wants to know how much he needs to save every year to amass $15,000 in five years at a 5% interest rate. What is he calculating using his financial calculator?

• A) Present value
• B) Future value
• C) Interest rate
• D) Payment

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Definitions:

Simulation Heuristic

A cognitive heuristic where people determine the likelihood of an event based on how easily they can imagine it happening, influencing their perception of risks and outcomes.

Conformity

Going along with the crowd, that is, saying or doing whatever other people are doing.

Intentional Behavior

Actions that are performed with awareness and purpose towards achieving a specific goal.

Illusory Correlation

The tendency to overestimate the link between variables that are related only slightly or not at all.