You Will Need to Buy a Replacement Computer, Costing $3

question 10

Multiple Choice

You will need to buy a replacement computer, costing $3 000, in five years time. If you have a bank account which earns 8% annual interest, how much must you put in the bank every year in order to have enough money for the replacement, assuming you make your first deposit in a year's time?

• A)$511
• B)$586
• C)$666
• D)$675
• E)$712

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Definitions:

Holder

An individual or entity that legally owns or possesses a document, such as a contract or financial instrument.

Drawer

The party that writes an order or the person who writes a check.

Accommodation Party

A party who signs an instrument to provide credit for another party who has also signed the instrument.

Credit

The granting of a loan and the creation of debt; any form of deferred payment, or the ability of an individual or company to borrow money with the promise to repay it at a later date.