Suppose You Hit a Progressive Jackpot on a Slot Machine

question 156

Essay

Suppose you hit a progressive jackpot on a slot machine in a casino in Atlantic City and are given the choice of the following prizes:
Prize 1: $150,000 to be received right away, with three additional payments of $150,000 to be received each year for the next three years.
Prize 2: $500,000 to be received right away.
If the interest rate is 5 percent, what is the present value of each prize?

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Definitions:

Learned Association

Learned association is a fundamental concept in psychology that involves connecting two stimuli or events in the mind, leading to a change in behavior.

Behaviors

Actions or reactions of individuals or groups in response to external or internal stimuli.

Shaping

A method of teaching new behaviors by rewarding closer approximations of the desired behavior until the exact behavior is achieved.

Tennis Instruction

Coaching or teaching that focuses on techniques, strategies, and skills for playing the sport of tennis.