What Is the Present Value of a $500 Payment Made

question 119

Multiple Choice

What is the present value of a $500 payment made in four years when the discount rate is 8 percent?

• A) $365.35
• B) $367.51
• C) $460.00
• D) $680.24

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Definitions:

Habituate

The process by which a person or animal becomes accustomed to a stimulus, leading to a decrease in response over time.

Primacy Effect

A bias towards better memory retention for items at the start of a list compared to those that come after.

Elaboration Effect

This effect describes how detailed processing and the integration of information into existing knowledge structures enhance memory retention.

Recency Effect

A memory phenomenon where the most recently presented items or experiences are likely remembered best.