Gordon and Lisa Estimate That They Will Need $1,875,000 in 40

question 44

Multiple Choice

Gordon and Lisa estimate that they will need $1,875,000 in 40 years for their retirement fund.If they can earn 8 percent annually on their funds,how much do they need to save annually? (Round off to the nearest units place.)

• A)$7,238
• B)$7,987
• C)$8,103
• D)$9,234
• E)$9,875

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Definitions:

Heuristics

Cognitive shortcuts or rules of thumb that simplify decision making by enabling quicker judgments with less effort but potentially at the expense of accuracy.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person’s mind when evaluating a specific topic, concept, method, or decision.

Representative Heuristic

A cognitive bias in which an individual categorizes a situation based on how similar it is to their prototype of a particular event or behavior, often leading to errors in decision making or judgment.

Stroop Effect

A psychological phenomenon that demonstrates the interference in reaction time when the name of a color is printed in a color not denoted by the name.