The Purchasing Power P (In Dollars) of an Annual Amount

question 78

Multiple Choice

The purchasing power P (in dollars) of an annual amount of A dollars after t years of 4% inflation decays according to . Determine how large a pension A needs to be so that the purchasing power P is $70,000 after 25 years? Round your answer to the nearest dollar. ​

• A)$260,683
• B)$190,280
• C)$115,410
• D)$156,191
• E)$95,141

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Definitions:

Product Line

A group of related products marketed under a single brand name by the same company.

Projected

Refers to estimates or forecasts of future financial outcomes, performance, or trends based on current data and analysis.

Earnings Before Interest

Earnings Before Interest, often abbreviated as EBI, refers to a company's profit before any interest expenses are deducted. It shows the financial performance from operational activities.

CCA Class

Refers to a classification under the Canadian Capital Cost Allowance that groups assets of a similar nature for depreciation purposes.