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The Present Value of $1,000 Received Three Years from Today

question 68

True/False

The present value of $1,000 received three years from today with a discount rate of 10% is less than the present value of a $500 annuity with the same discount rate over the same period.


Definitions:

Drive Reduction Theory

A psychological concept that suggests motivation arises from the desire to reduce an uncomfortable internal state caused by unmet needs.

Homeostasis

The self-regulating process by which biological systems tend to maintain stability while adjusting to conditions that are optimal for survival.

Arousal Theory

A theory suggesting that people are motivated to maintain an optimal level of arousal, which varies from one individual to another.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow that presents a hierarchy of human needs, from basic physiological needs to self-actualization.

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