You Have Won a Contest and Will Receive $2,500 a Year

question 48

Multiple Choice

You have won a contest and will receive $2,500 a year in real terms for the next 3 years. Each payment will be received at the end of the period with the first payment occurring one year from today. The relevant nominal discount rate is 6.3 percent and the inflation rate is 4.5 percent. What are your winnings worth today?

• A)$7,249
• B)$7,367
• C)$7,401
• D)$7,500
• E)$7,838

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Definitions:

Morphological Phylogeny

The study of the evolutionary relationships among species based on their physical characteristics and structural features.

Marsupials

Mammals characterized by giving birth to partially developed offspring that complete their development in an external pouch.

Greenhouse Effect

A natural process where certain gases in Earth's atmosphere trap heat, keeping the planet warmer than it would be otherwise.

Solar Radiation

The electromagnetic energy emitted by the sun, including visible light, ultraviolet light, and infrared energy, which is a key driver of Earth's climate and ecosystem.