James Offers You $1,000 Today or $X in 7 Years

question 5

Multiple Choice

James offers you $1,000 today or $X in 7 years.If the interest rate is 4.5 percent,then you would prefer to take the $1,000 today if and only if

• A)X < 1,045.00.
• B)X < 1,188.89.
• C)X < 1,266.67.
• D)X < 1,360.86.

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Definitions:

Nonsense Syllables

A string of letters that has no meaning, used in psychological experiments to study memory and learning processes.

Short-Term Memory

A cognitive system with a limited capacity that is capable of temporarily holding information available for processing.

Memory Span

The amount of information or number of items that an individual can retain and recall in short-term memory.

Sensory Memory

The briefest memory component that enables people to maintain sensations of sensory data even after the initial stimulus has disappeared.