What Amount Would You Have to Invest Now at 7

question 53

Multiple Choice

What amount would you have to invest now at 7% compounded annually in order to make withdrawals of $20,000 once per year for 25 years? The first withdrawal is to be made one year from now.

• A) $233,072
• B) $1,264,981
• C) $544,343
• D) $197,226
• E) $427,561

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Definitions:

Plaintiff Forfeiture

A legal penalty where a plaintiff loses the right to claim certain benefits or privileges due to a failure to meet necessary legal requirements or actions.

Agency Relationship

A legal bond in which one person, the agent, acts on behalf of another, the principal, in transactions with third parties.

Principal

In finance, the original amount of money invested or loaned, before interest.

Agent

An individual or entity authorized to act on behalf of another person or entity, known as the principal, in various transactions or negotiations.