You Are to Receive $16 700 from Your Trust Fund

question 1

Multiple Choice

You are to receive $16 700 from your trust fund in 7.5 years. You negotiate a deal where you can withdraw $350 per month starting 2.75 years before you can withdraw the remainder of the funds. You are able earn 4.18% compounded annually on your money. How much is your trust fund reduced to?

• A) $4195.40
• B) $4159.40
• C) $4459.40
• D) $4495.40
• E) $4155.40

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Definitions:

Proposed Use

An intended or suggested way of utilizing something, often laid out in plans or discussions before implementation.

Cash

Physical money, such as coins and bills, or balances in checking or savings accounts, available for use immediately.

Differential Analysis

A decision-making process that focuses on the costs and benefits that change between decision alternatives.

Differential Costs

The difference in cost between two alternative decisions, or changes in cost that result from choosing one option over another.