You Have Just Won $50,000 on Your Scratch and Win

question 66

Multiple Choice

You have just won $50,000 on your Scratch and Win ticket,but you won't be awarded the money until your 40th birthday,20 years from now.If the appropriate discount rate is 15%,what is the present value of your winnings?

• A) $3,055.01
• B) $3,513,27
• C) $2,656.53
• D) $3,048.78
• E) $3,067.49

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating the spread of data points.

Sampling Distribution

The distribution of probabilities for a certain statistic, originating from a random sample.

Normal Distribution

In this type of distribution, occurrences of data are more frequent near the mean and decrease in frequency as they move away from the mean, with the distribution being symmetric.

Sampling Distribution

The probability distribution of a statistic based on random samples from a population, used to estimate population parameters.