Which of the Following Is Equal to the Present Discounted

question 1

Multiple Choice

Which of the following is equal to the present discounted value of Social Security's obligations minus the present discounted value of projected Social Security taxes over the next 75 years?

• A) $1.1 trillion
• B) $5.6 trillion
• C) $6.8 trillion
• D) $11.1 trillion

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Definitions:

Simple Interest

Simple interest is a calculation of interest on the principal amount of a loan or deposit, based on a fixed interest rate and period, without compounding.

Compounded Continuously

Compounded continuously refers to the mathematical limit where the number of compounding periods per year reaches infinity, leading to the exponential growth of an investment or loan.

Compounded Quarterly

The process of calculating interest on both the initial principal and the accumulated interest from previous periods four times a year.

Annual Percentage Rate

A measure that represents the actual yearly cost of funds over the term of a loan, including any fees or additional costs associated with the transaction.