Suppose you are offered the alternative of receiving either $3,000 at the end of five years or P dollars today. There is no question that the $3,000 will be paid in full (no risk). Because you have no current need for the money, you would invest the P dollars in business that pays 8% or more profit. a) What value of P would make you indifferent to your choice between P dollars today and the promise of $3,000 at the end of five years? b) What if the early payment option gets changed to: Half of the payment (P/) is given now while the other half (P/2) is given after 1 year. Find the value of P.
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
Suppose you are offered the alternative of receiving either $3,000 at the end of five years or P dollars today. There is no question that the $3,000 will be paid in full (no risk). Because you have no current need for the money, you would invest the P dollars in business that pays 8% or more profit.
a) What value of P would make you indifferent to your choice between P dollars today and the promise of $3,000 at the end of five years?
b) What if the early payment option gets changed to: Half of the payment (P/) is given now while the other half (P/2) is given after 1 year. Find the value of P.
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