Shah Sets Aside $2,000 Each Year for Five Years

question 63

Multiple Choice

Shah sets aside $2,000 each year for five years. After five years, he then withdraws the funds on an equal annual basis for the next four years. If Shah wishes to determine the amount of the annuity to be withdrawn in years 6 through 9, he should use the following two tables in this order:

• A) present value of an annuity of $1; future value of an annuity of $1
• B) future value of an annuity of $1; present value of an annuity of $1
• C) future value of an annuity of $1; present value of $1
• D) future value of an annuity of $1; future value of $1

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Definitions:

Social Loafing

The phenomenon where individuals exert less effort to achieve a goal when they work in a group than when they work alone.

Social Impact Theory

Social impact theory suggests that the amount of influence a person experiences in a group situation depends on the strength, immediacy, and number of other people in the group.

Social Expectation

Norms or standards that a society or community holds, which guide and shape behaviors and attitudes of its members.

Social Loafing

When working in a group, individuals tend to contribute less effort towards attaining a goal compared to when they operate solo.