How Much Must Be Deposited on January 1, 2014 in a Savings

question 24

Multiple Choice

How much must be deposited on January 1, 2014 in a savings account paying 6% annually in order to make annual withdrawals of $30,000 at the end of the years 2014 and 2015? The present value of one at 6% for one period is .9434.

• A) $55,002
• B) $56,610
• C) $60,000
• D) $26,700

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Definitions:

Profit-Seeking Entrepreneurs

Individuals who start and run businesses with the primary goal of making a profit, often taking on financial risks in the pursuit of economic gains.

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, representing excess profit above normal expected returns.

Resources Required

The inputs needed for the production of goods or services, including time, labor, capital, and materials.

Long-Run Adjustment

The process of economic agents fully adapting to changes in conditions or policies over time, reaching a new equilibrium.