Assume You Can Invest Money at a 14% Rate of Return

question 12

Multiple Choice

Assume you can invest money at a 14% rate of return. How much money must be invested now in order to be able to withdraw $5,000 from this investment at the end of each year for 8 years, the first withdrawal occurring one year from now?

• A)$24,840
• B)$23,195
• C)$21,440
• D)$1,755

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Definitions:

Standard Error of Measurement (SEM)

A statistical measure that reflects the amount of error in the scores of a test, indicating how much measured test scores are expected to fluctuate around a true score.

T Score

A standardized score with a mean of 50 and a standard deviation of 10, often used in psychological and educational testing to compare an individual's test performance with a norm group.

Test-Retest Reliability

Giving the test twice to the same group of people and then correlating the scores of the first test with those of the second test to determine the reliability of the instrument.

Sten

A standard ten scale used for scoring and interpreting psychological and other types of tests, where scores are often transformed to fit a scale ranging from 1 to 10.