If You Have a Choice of Receiving a Cash Payment

question 21

Multiple Choice

If you have a choice of receiving a cash payment of $5 today:

• A) you are indifferent to receiving $5.07 next year if your opportunity cost is 7%.
• B) you are indifferent to receiving $5.00 next year if your opportunity cost is 7%.
• C) you are indifferent to receiving $5.35 next year if your opportunity cost is 10%.
• D) you are indifferent to receiving $5.35 next year if your opportunity cost is 7%.
• E) you are indifferent to receiving $5.10 next year if your opportunity cost is 10%.

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Definitions:

Insured

An insured individual is someone who is covered under an insurance policy, protecting them against certain risks or losses.

Deductible

The amount paid out of pocket by the policyholder before an insurance company pays any expenses.

Medical Bills

Charges incurred for medical products or services, including hospital care, physician services, and medications.

Insurance Premiums

The amount that individuals or entities must pay for an insurance policy to remain active.