If the Interest Rate Is 5 Percent and Cash Flows

question 138

Multiple Choice

If the interest rate is 5 percent and cash flows are $3,000 at the end of year one and $5,000 at the end of year two,then the present value of these cash flows is:

• A) $7,392.29.
• B) $8,400.34.
• C) $4,222.50.
• D) $400.74.

---

Definitions:

George Vaillant

A psychiatrist known for his research on aging and adult development, particularly for his work on the Grant Study, a longitudinal study of men's lives.

Realistic Period

The third stage of Ginzberg’s theory, which occurs in early adulthood, when people begin to explore specific career options, then narrow their choices and make a commitment.

Fantasy Period

According to Ginzberg, the period, lasting until about age 11, when career choices are made, and discarded, without regard to skills, abilities, or available job opportunities.

Social Clock

The culturally determined psychological timepiece providing a sense of whether we have reached the major benchmarks of life at the appropriate time in comparison to our peers.