A person's occupation has no effect on the goods and services that she buys

Suppose someone offered you your choice of two equally risky annuities, each paying $5,000 per year for 5 years. One is an annuity due, while the other is a regular (or deferred) annuity

If you are a rational wealth maximizing investor, which annuity would you choose? A) The annuity due B) The deferred annuity C) Either one, because as the problem is set up, they have the same present value. D) Without information about the appropriate interest rate, we cannot find the value of the two annuities, hence we cannot tell which is better. E) The annuity due; however, if the payments on both were doubled to $10,000, the deferred annuity would be preferred.

Simplistic Inc. has a project that costs $600,000. It has a 70% chance of a $1,000,000 payoff and a 30% chance of a $100,000 payoff. What is the expected payoff and the expected profit or loss from the new project?

A) The expected payoff is $730,000, and the expected gain is $130,000. B) The expected payoff is $700,000, and the expected loss is $100,000. C) The expected payoff is $600,000, and the expected gain is $0. D) The expected payoff is $500,000, and the expected loss is $100,000.