Two Payments of $850 and $600 Must Be Made Two

question 56

Multiple Choice

Two payments of $850 and $600 must be made two years and five years from now respectively. If money can earn 4% compounded semi-annually, what single payment, three years from now, would be equivalent to the two scheduled payments?

• A) $1,477.16
• B) $1,609.22
• C) $15,783.88
• D) $1,404.19
• E) $1,438.65

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Definitions:

Sample Mean

The average value of a subset of observations from a larger population, intended to estimate the population mean.

Resamples

The process of drawing repeated samples from the same initial dataset, typically used in bootstrap and other resampling methodologies.

Standard Error

A measure of the sampling distribution variability of a statistic, often used to describe the accuracy of a sample mean estimate.

Sample Median

A measure of central tendency that identifies the middle value in a sorted sample set.