Scenario: a Friend Approaches You with Four Different Investment Plans

question 114

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 net present value of the investment in Plan 4 is equal to ________.

• A) ‒$8,001
• B) ‒$556
• C) ‒$791
• D) ‒$3,737

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Definitions:

Personal Unconscious

A term from Jungian psychology referring to all information that is present within an individual's mind but not currently in conscious awareness.

Libido

In psychoanalytic theory, the energy of the sexual drive as a component of the life instinct.

Archetypes

Universal, inherited models of people, behaviors, or personalities that inform various human traits and interactions, as proposed by Carl Jung.

Reservoir

A storage space for fluids, often water, or a metaphorical term for a large supply or source of something.