After Receiving a Reward for Information Leading to the Arrest

question 17

Multiple Choice

After receiving a reward for information leading to the arrest of a notorious criminal, you are considering investing it in an annuity that pays $5, 000 at the end of each year for 20 years.You could earn 5% on your money in other investments with equal risk.What is the most you should pay for the annuity?

• A) $50, 753
• B) $53, 424
• C) $56, 236
• D) $59, 195
• E) $62, 311

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Definitions:

Pay

The amount of money or compensation given to an employee by an employer in exchange for work performed, usually provided on a regular basis such as hourly, weekly, or monthly.

Identity Certainty

A strong sense of clarity and confidence in one’s beliefs, goals, and sense of self.

Confident Power

The strength and assertiveness someone displays stemming from a strong belief in their own abilities and judgment.

Generativity

A stage of psychosocial development, in adulthood, concerned with establishing and guiding the next generation.