If Delores Wanted to Make Sure That She Had $3,000

question 195

Multiple Choice

If Delores wanted to make sure that she had $3,000 a year from now, how much would she need to save now if the interest rate is 7 percent?

• A) $3000
• B) $2804
• C) $2790
• D) $2666

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Definitions:

Total Income

The sum of all revenue and gains for an entity over a specified period of time.

Present Value

The present value of a future amount of money or a series of future cash flows, discounted at a specific rate of return.

Internal Rate of Return

The discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.