Abby Mia Wants to Know How Much Must Be Deposited

question 41

Multiple Choice

Abby Mia wants to know how much must be deposited in her local bank today so that she will receive yearly payments of $18,000 for 20 years at a current rate of 9% compounded annually. (Use the tables in the handbook.)

• A)$1,085.82
• B)$1,463.13
• C)$164,313
• D)$163,313
• E)None of these

---

Definitions:

Anti-inflation

Measures and policies implemented to reduce or control the rate of inflation in an economy.

Cold Turkey

The announcement and execution of tough measures to reduce high inflation.

Time-inconsistency

Time-inconsistency refers to the tendency of individuals or governments to change their plans about what they believe will be the best course of action in the future, often leading to inconsistencies in policy or personal decision-making.

Inflation Target

Commitment of central bankers to keep inflation below a certain rate for the next year or two.