In Which of the Following Instances Is the Present Value

question 2

Multiple Choice

In which of the following instances is the present value of the future payment the largest?

• A)You will receive $1,000 in 5 years and the annual interest rate is 5 percent.
• B)You will receive $1,000 in 10 years and the annual interest rate is 3 percent.
• C)You will receive $2,000 in 10 years and the annual interest rate is 10 percent.
• D)You will receive $2,400 in 15 years and the annual interest rate is 8 percent.

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Definitions:

Medicare

A federal health insurance program in the United States primarily for people who are 65 or older, as well as for certain younger people with disabilities or specific diseases.

Medical Expenses

Costs incurred in the prevention or treatment of injury or disease, including fees for physician services, medications, and hospital stays.

Independent Practice Association

An organization of independent physicians, or other healthcare providers, that contracts with health plans or directly with patients to provide care within negotiated price and service constraints.

HMO

Health Maintenance Organization, a type of health insurance plan that requires members to receive healthcare services from a network of designated providers.