Pam Is in Need of Cash Right Now and Wants

question 10

Multiple Choice

Pam is in need of cash right now and wants to sell the rights to a $1,000 cash flow that she will receive 5 years from today.If the discount rate for such a cash flow is 9.5%,then what is the fair price that someone should be willing to pay Pam today for rights to that future cash flow?

• A) $1,574.24
• B) $635.23
• C) $260.44
• D) $913.24

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Definitions:

Interdependence

A mutual reliance among members of a group, where the actions of one member affect the outcomes of others.

Mutuality

A characteristic of relationships in which individuals share common feelings, actions, or relationships, benefiting all involved parties.

Commitment

The state of being emotionally or intellectually devoted to a cause, activity, or relationship.

Perceived Similarity

The extent to which individuals believe they share common attributes, values, or experiences with others, influencing social attraction and connection.