Randy Has to Choose Between Two Cash Flows

question 33

True/False

Randy has to choose between two cash flows. He could either receive the future value of an investment of $1,000 at 8 percent annually in three years or in five years. Randy should always choose the shorter investment term because it is worth more today.

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Definitions:

Income Increases

Situations or events that lead to a rise in the amount of money received by individuals or entities, potentially affecting consumption and saving behaviors.

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to analyze the effect of one variable on another while holding other relevant factors constant.

Economic Variables

Quantitative measures that represent a characteristic of the economy or a part of the economy, influencing or describing economic activity.

Positive Economic Analysis

An objective approach to economics that focuses on describing and explaining economic phenomena without making normative judgments.