Scenario: a Friend Approaches You with Four Different Investment Plans

question 125

Multiple Choice

Scenario: A friend approaches you with four different investment plans that offer you the following returns on an investment of $10,000.
Plan 1: promises a return of $20,000 in 5 years
Plan 2: promises you a return of $5,000 in 2 years and $2,000 in 3 years
Plan 3: promises you a return of $20,000 in 20 years
Plan 4: promises you a return of $15,000 in 10 years
The market rate of interest is 5 percent.
-Refer to the scenario above.The present value of the positive cash flows from the investment in Plan 2 is equal to ________.

• A) $9,209
• B) $6,263
• C) $15,670
• D) $7,537

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Definitions:

Small Populations

Populations with a small number of individuals, which may face increased risks of extinction due to genetic drift, inbreeding, and reduced genetic diversity.

Genetic Isolation

A situation where different populations of a species are unable to interbreed, often leading to the formation of new species.

Secondary Contact

Refers to the reintroduction or interaction of populations that were previously isolated, often used in the context of evolutionary biology.

Novel Trait

A newly evolved feature in an organism that significantly differs from functions or structures in ancestral species, often due to genetic mutations or environmental changes.