Suppose You Win a Small Lottery and You Are Given

question 65

Multiple Choice

Suppose you win a small lottery and you are given the following choice: You can receive (1) an immediate payment of $5,000 or (2) two annual payments, each in the amount of $2,700, with the first payment coming one year from now, and the second payment coming two years from now. You would choose to take the two annual payments if the interest rate is

• A)2 percent, but not if the interest rate is 3 percent.
• B)3 percent, but not if the interest rate is 4 percent.
• C)4 percent, but not if the interest rate is 5 percent.
• D)5 percent, but not if the interest rate is 6 percent.

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Definitions:

Series RL Circuit

An electrical circuit consisting of a resistor (R) and an inductor (L) connected in series, used to study the behavior of circuits with resistive and inductive components.

Inductive Reactance

The opposition to the change in current in an inductor, depending on the frequency of the current and the inductance.

Angle Theta

Generally used to express the phase angle difference between voltage and current in a reactive circuit.

Total Resistance

The sum of all resistances within an electrical circuit that affects the overall flow of electric current.