In Answering Which of the Following Questions Would You Find

question 206

Multiple Choice

In answering which of the following questions would you find it necessary to calculate a future value?

• A)If Jill puts $5,000 today into a bank account that pays 3 percent interest,then how much will she have in the account after 2 years?
• B)Should ABC Corporation buy a factory today for $2 million,knowing that the factory will yield the corporation $3 million after 5 years?
• C)As the winner of a lottery,should Michael choose an immediate payment of $250,000 or should he choose annual payments of $30,000 for each of the next 10 years?
• D)You would find it necessary to calculate a future value in order to answer all of these questions.

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Definitions:

Halo Effect

The tendency to extend an overall impression of a person, object, or institution based on one characteristic, either positive or negative.

Consistency Effect

The tendency for people to seek, interpret, and remember information that confirms their preexisting beliefs and attitudes.

Superimposing

The process of laying or placing one thing over another, typically in a way that both are still evident, often used in visual arts or image processing.

Direct Perception Checking

Asking the observed person to confirm an interpretation or a perception about him or her.