Your Wealthy Neighbor Has Promised to Give You $3000 a Year

question 185

Multiple Choice

Your wealthy neighbor has promised to give you $3000 a year at the end of each of the next four years to help with college. Using a discount rate of 4%, the present value of the gift can be stated as

• A)PV = $3000 (PV factor, i = 2%, n = 4).
• B)PV = $3000 × 4% × 5.
• C)PV = $3000 (Annuity FV factor, i = 4%, n = 4).
• D)PV = $3000 (Annuity PV factor, i = 4%, n = 4).

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Definitions:

Reasoning Fallacy

A flaw or error in reasoning that undermines the logical validity of an argument.

Alternative Explanations

Different reasons or theories provided to account for a phenomenon or observation.

Critical Thinking

The objective analysis and evaluation of an issue in order to form a judgment, often requiring skepticism and the questioning of assumptions.

Gender Expectations

Socially constructed norms and beliefs about the behaviors and attributes considered appropriate for men and women in a given society.