You Have Won the Lottery and Have Been Given the Choice

question 31

Multiple Choice

You have won the lottery and have been given the choice of receiving $5 million today or $10 million after 10 years. Assume that the interest rate remains fixed at 10% per year for the entire 10-year period. You should choose:

• A)$10 million after 10 years, since this is more than you would get if you invested $5 million for 10 years at an annual rate of interest of 10%.
• B)$10 million after 10 years, since that is a larger amount than the present value of $5 million paid after 10 years.
• C)$5 million today, since it would be worth more than $10 million after 10 years if the $5 million earned interest at the rate of 10% per year.
• D)$10 million after 10 years, since it is the larger amount.

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Definitions:

Orangutan Males

The male members of the orangutan species, known for their distinctive reddish-brown hair, large size, and solitary nature, primarily found in the rainforests of Borneo and Sumatra.

Adaptive Significance

The importance of a trait, behavior, or characteristic in promoting the survival and reproductive success of an organism.

Bonobos

A species of great ape known for its high levels of social cooperation and sexual behavior, native to forests of the Democratic Republic of the Congo.

Social Behavior

Behavior among two or more organisms, typically of the same species, that encompasses cooperation, competition, aggression, and communication.