You Will Need at Least $5,000 in Four Years and Your

question 49

Multiple Choice

You will need at least $5,000 in four years and your friend says she can either loan you $5,000 all at once four years from now or she can deposit $1,200 in your savings account at the end of each year for the next four years.Your savings account earns 7% interest,compounded annually.Which option would be worth more to you four years from now,and how much more? (Future Value of $1,Present Value of $1,Future Value Annuity of $1,Present Value Annuity of $1. ) (Use appropriate factor from the PV tables.Round your final answer to the nearest dollar amount. )

• A)The $5,000 in four years will be worth $328 more than the annual deposits.
• B)The annual deposits will be worth $328 more than the $5,000 in four years.
• C)The $5,000 in four years will be worth $136 more than the annual deposits.
• D)The annual deposits will be worth $136 more than the $5,000 in four years.

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