The Solution to This Problem Requires Time Value of Money

question 164

Multiple Choice

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. Denise wants to help pay for her niece's college tuition.Her niece will begin college in one year.How much would Denise need to put into a savings account today at 6% so that her niece can withdraw $10,000 per year for 4 years, and reduce the account balance to zero at the end of the 4 years?

• A) $31,680
• B) $34,650
• C) $37,600
• D) $37,720

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Definitions:

Interbreed

To mate or cross different breeds, varieties, or species of organisms, often resulting in hybrid offspring.

Population

A group of individuals of the same species living and interacting within a particular area.

Gene Pool

Total of the alleles of all the individuals in a population.

Permian

The last geological period of the Paleozoic era, spanning from about 299 to 252 million years ago, preceding the Mesozoic era.