Sue Gray Wants to Invest a Certain Sum of Money

question 58

Multiple Choice

Sue Gray wants to invest a certain sum of money at the end of each year for five years. The investment will earn 6% compounded annually. At the end of five years, she will need a total of $40,000 accumulated. How should she compute her required annual invest-ment?

• A) $40,000 times the future value of a 5-year, 6% ordinary annuity of 1.
• B) $40,000 divided by the future value of a 5-year, 6% ordinary annuity of 1.
• C) $40,000 times the present value of a 5-year, 6% ordinary annuity of 1.
• D) $40,000 divided by the present value of a 5-year, 6% ordinary annuity of 1.

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Definitions:

Electoral College

A body of electors established by the Constitution that officially elects the President and Vice President of the United States based on the popular vote in each state.

President of the United States

The head of state and head of government of the United States, serving as the chief executive of the federal government and Commander-in-Chief of the armed forces.

Consent of the Governed

A principle that the authority of a government should depend on the consent of the people, as expressed by votes in elections.

John Locke

A 17th-century English philosopher known for his work on political philosophy, particularly regarding the social contract and natural rights.