The Solution to This Problem Requires Time Value of Money

question 54

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. David, a high school math teacher, wants to set up an IRA account into which he will deposit $2,000 per year. He plans to teach for 20 more years and then retire. If the interest on his account is 7% compounded annually, how much will be in his account when he retires?

• A) $81,990
• B) $74,458
• C) $ 4,800
• D) $21,118

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Definitions:

Aggregate Demand

The sum of all expenditures for goods and services.

GDP

The total monetary value of all goods and services produced within a country's borders in a specific time period.

Health Care Costs

The expenses associated with medical services, including treatments, medications, hospital stays, and preventive care measures.

Industrial Revolution

A period of major industrialization from the late 18th to early 19th century that transformed predominantly agrarian, manual labor-based societies into industrialized, machine-driven ones.