Use the Information for the Question(s)below

question 83

Multiple Choice

Use the information for the question(s) below.
Assume that you are 30 years old today and that you are planning on retirement at age 65.Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work.To save for your retirement,you plan on making annual contributions to a retirement account.Your first contribution will be made on your 31st birthday and will be 8% of this year's salary.Likewise,you expect to deposit 8% of your salary each year until you reach age 65.Assume that the rate of interest is 7%.
-If the appropriate interest rate is 8%,then present value of $500 paid at the end of each of the next 40 years is closest to:

• A)$23.
• B)$5962.
• C)$6439.
• D)$20,000.

---

Definitions:

Oriental Rugs

Hand-knotted or woven rugs from the Middle East, Central Asia, and the Far East, known for their intricate patterns and craftsmanship.

Brick-And-Mortar

Traditional physical retail stores as opposed to online or electronic marketplaces.

Retail Feed Stores

Shops or outlets that specialize in selling feed and other supplies for animals to the general public.

Wholesalers

Businesses that purchase goods in large quantities from manufacturers or distributors and then sell them in smaller quantities to retailers or other businesses.