You Receive $500 Today Which You Plan to Save for Two

question 48

Multiple Choice

You receive $500 today which you plan to save for two years. Also, in two years you will be given another $500. If the interest rate is 5 percent, what is the present value of the payment of $500 today and the $500 in two years?

• A) $500(1.05)² + $500/(1.05)²
• B) $500(1.05)² + $500
• C) $500 + $500/(1.05)²
• D) $500 + $500

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Definitions:

Dialecticism

A philosophy or worldview that emphasizes the concept of change and the interdependence of opposites within the universe or in human reasoning.

Long-Term Memory

Information from past experience that may or may not be currently activated.

Information

Data that is provided or learned about a subject or topic.

Sensory Input

Information that is perceived by the senses, including sight, sound, smell, taste, and touch, which is then processed by the brain.