Richard e-mailed me that he and Monica differed about the impact of his extra spending over the past 15 years. He calculated it at about $3,000 a year. He said the total cost of $45,000 was well within his capability to make up. Monica said the cost was much higher and asked that they compute it. They had been offered an investment of $20,000 that would pay $70,000 in 20 years. They want to know if they should take it. Finally, Richard could sign up for an annuity at work. It would cost $100,000 at age 65 and provide payments of $8,000 per year over his expected 17-year life span. He wants to know if it is attractive. The appropriate market rate of return on investments is 7 percent after tax.
Case Application Questions
- Calculate what the $3,000-per-year deficit, had it been invested, would have amounted to at the end of the 15-year period.
- Explain to Richard what compounding is and how it affected the cumulative amount received in question 1.
- Calculate the return on the proposed $20,000 investment and indicate the factors entering into your recommendation to accept or reject it.
- Indicate the expected return on the annuity and whether it should be accepted or rejected.
- Explain the time value of money for the financial plan using your answers to questions 1 through 4 in this part of the financial plan to help you communicate the time value information to Richard and Monica.
In this experiment, small and large lima beans were used to test whether or not bean beetles had a preferred site size for oviposition. Our hypothesis proposed that if a preference was shown, a greater number of eggs would be oviposited on the larger lima beans compared to small lima beans. We predicted that they would prefer the larger bean because it has a greater surface area, therefore finding a spot on the bean to oviposit would be easier to do. On the contrary, our results show that we reject the null hypothesis due to the fact that our p-value was so extremely small. Because of this, we can conclude that C. maculatus prefer smaller sized lima beans for oviposition. The preference for a smaller lima bean could be due to a chemical cue preferred by, or undesirable to, bean beetles. Another reason could be that the nutrient to surface area ratio is greater, or because larger beans may be more appealing to predators. According to a similar experiment conducted by Jason Cope and Charles Fox, bean beetle eggs were distributed so that resources were maximized per individual offspring (2002). They found that females preferred a larger mass compared to surface area due to the quantity of resources available inside the seed. Although our experiments measured different variables, in both findings we can identify that a larger surface area is not ideal for bean beetle site preference for oviposition.
In an experiment conducted by Grace Pitman, Tyler Flockhart, and Ryan Norris, they measured which size and what density of a milkweed patch was preferred by the monarch butterfly for oviposition (2018). Their results showed that a small, low-density patch had the highest egg density. This was because larger patches showed an increase in predator abundance (Flockhart et al. 2018). When determining sites for oviposition, the one that increases probability of offspring survival is more desirable. Therefore, choosing a small, low-density site for oviposition increased the probability that the offspring would survive and reproduce. This relates to our experiment because we tested to find the preferred site that would increase