You Have the Option Receiving $4,000 at the End of Every

question 9

Multiple Choice

You have the option receiving $4,000 at the end of every six months for 15 years or a single lump sum of $250,000 at the end of the 15 years. What effective interest rate would make the two options equal in value?

• A) 9.500%
• B) 4.642%
• C) 9.770%
• D) 5.250%
• E) 9.285%

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Definitions:

Working Memory Test

An assessment that measures an individual's ability to hold and manipulate information in their mind over short periods of time.

General Intelligence

The theory that a single, general ability underlies an individual's performance across a variety of cognitive tasks.

Savant

Refers to a person, often with a developmental disorder such as autism, who possesses extraordinary abilities in a specific area despite limitations in other domains.

Stereotype Threat

The risk of confirming negative stereotypes about one's group, which can hinder performance in affected individuals.