Which of the Following Decisions Would Involve the Use of the Future

question 43

Multiple Choice

Which of the following decisions would involve the use of the future value of $1?

• A) Your brother buys your car and offers to pay you $500 now or $1,500 in two years.
• B) You win a lawsuit and are offered a lump-sum payment today of $100,000 or $15,000 a year for 20 years.
• C) Your father and mother wish to deposit enough money on the date of your high school graduation to enable you to take a $7,000 cruise when you graduate from college in 4 years.
• D) You want to have $1,000,000 in order to retire at age 55, but need to know how much you will need to deposit each year from now until your 55th birthday.

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Definitions:

Probability

A mathematical measure of the likelihood of an event occurring, often expressed as a number between 0 and 1.

Insomnia

A sleep disorder characterized by difficulty falling and/or staying asleep.

Probability

The quantification of how probable it is for an event to happen, shown as a number ranging from 0 to 1, with 0 meaning it cannot happen and 1 meaning it will definitely happen.

College Students

Individuals enrolled in an institution of higher education pursuing undergraduate or postgraduate studies.