The Solution to This Problem Requires Time Value of Money

question 61

Multiple Choice

The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. Josh and Sara want to buy a house in 4 years. If the house will cost $180,000, how much must they deposit at the end of every year for the next 4 years at 5% compounded annually in order to buy the house?

• A) $41,763
• B) $32,040
• C) $36,990
• D) $45,000

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Definitions:

Regressive Taxes

Taxes that take a larger percentage of income from low-income earners than from high-income earners, disproportionally burdening the former.

Feudalism

A medieval European social system in which land was held by nobles in exchange for military service, and vassals were in turn tenants of the nobles, while the peasants were obligated to live on their lord's land and give him homage, labor, and a share of the produce.

Expansion Of Exploration

The process or act of searching for new knowledge, resources, or territories.

Subsequent Increasing Demand

Refers to the phenomenon where demand for a product or service increases following a certain event or development.