You Are Comparing Two Annuities with Equal Present Values

question 80

Multiple Choice

You are comparing two annuities with equal present values. The applicable discount rate is 7.5%. One annuity pays $5,000 on the first day of each year for twenty years. How much does the second annuity pay each year for twenty years if it pays at the end of each year?

• A) $4,651
• B) $5,075
• C) $5,000
• D) $5,375
• E) $5,405

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Definitions:

Fromm's Needs

A concept developed by Erich Fromm, emphasizing societal and individual needs that drive personality development, such as relatedness, transcendence, rootedness, sense of identity, and frame of orientation.

Maslow's Needs

Refers to Maslow's hierarchy of needs, a motivational theory in psychology comprising a five-tier model of human needs, from basic (physiological) to advanced (self-actualization).

Holistic-Dynamic Theory

A theory suggesting individuals are unified beings who should be understood in terms of their dynamic relationships within a whole context, often emphasizing the importance of motivation and personal growth.

Maslow's Needs

A hierarchy of human needs proposed by Abraham Maslow, progressing from basic physical needs to complex psychological growth demands.