Lucy and Fred Want to Begin Saving for Their Baby's

question 6

Multiple Choice

Lucy and Fred want to begin saving for their baby's college education. They estimate that they will need €300,000 in eighteen years. If they are able to earn 5% per annum, how much must be deposited at the end of each of the next eighteen years to fund the education?

• A) €11,618
• B) €25,664
• C) €24,823
• D) €10,664

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Definitions:

Surplus of Labor

A situation in which the supply of labor exceeds the demand for labor, often resulting in unemployment or underemployment.

Minimum-Wage Law

Legislation that sets the lowest hourly wage rate that an employer can legally pay its workers, intended to protect workers from exploitation.

Equilibrium Level

A condition where the amount of goods and services available in the market equals the demand for them, leading to stable pricing and quantity levels.

Efficiency Wage

A higher-than-market wage paid by employers to increase worker productivity and loyalty.