Last Year, You Deposited $25,000 into a Retirement Savings Account

question 276

Multiple Choice

Last year, you deposited $25,000 into a retirement savings account at a fixed rate of 7.5%. Today, you could earn a fixed rate of 8% on a similar type account. However, your rate is fixed and cannot
Be adjusted. How much less could you have deposited last year if you could have earned a fixed
Rate of 8% and still have the same amount as you currently will when you retire 40 years from
Today?

• A) $1,218.46 less
• B) $1,666.67 less
• C) $2,408.28 less
• D) $3,628.09 less
• E) $4,331.30 less

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, often used in cost accounting.

Ending Inventory

The aggregate worth of items on offer at the termination of an accounting cycle.

Beginning Inventory

The value of inventory held by a business at the start of an accounting period.

Inventory Costing Method

Techniques used to assign costs to inventory and cost of goods sold, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).