Of the Following Investments, Which Would Have the Lowest Present

question 1

Multiple Choice

Of the following investments, which would have the lowest present value? Assume that the effective annual rate for all investments is the same and is greater than zero.

• A) Investment A pays $250 at the end of every year for the next 10 years (a total of 10 payments).
• B) Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20 payments).
• C) Investment C pays $125 at the beginning of every 6-month period for the next 10 years (a total of 20 payments).
• D) Investment D pays $2,500 at the end of 10 years (just one payment).
• E) Investment E pays $250 at the beginning of every year for the next 10 years (a total of 10 payments).

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Definitions:

Human Behavior

The range of actions and mannerisms exhibited by humans in conjunction with their environment, influenced by culture, attitudes, emotions, and values.

Gestalt

A theory in psychology that proposes objects are recognized in their entirety before being perceived through their individual parts, emphasizing the whole of anything is greater than its parts.

Humanism

A philosophical and ethical stance that emphasizes the value and agency of human beings, individually and collectively, often considering human needs, interests, and dignity foremost.

Functionalism

A psychological philosophy that considers mental life and behavior in terms of active adaptation to the person's environment.