Isaac and Faith Both Want to Have $5,000 in Three

question 81

Multiple Choice

Isaac and Faith both want to have $5,000 in three years. Isaac expects to earn 8% on his investments and Faith expects a 7% rate of return. Which one of the following statements is correct
Concerning the amount of money they each need to invest today?

• A) Faith needs to deposit $112.33 more than Isaac today.
• B) Faith needs to deposit $173.33 more than Isaac today.
• C) Isaac needs to deposit $3,699.16 today.
• D) Faith needs to deposit $3,081.49 today.
• E) Both Faith and Isaac should deposit $3,969.16 today.

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Definitions:

Credit Balances

Situations in financial accounting where a customer has paid more than the total amount due for goods or services, resulting in a surplus in their account.

Professional Courtesy Discount

A discount offered by professionals to their peers, employees, or other selected individuals as a form of respect or acknowledgement.

Discounts

Discounts are reductions from the usual cost of goods or services, often used as an incentive for purchase.

Double-Entry Bookkeeping

An accounting method where every entry to an account requires a corresponding and opposite entry to a different account, ensuring the accounting equation balances.