The Solution to This Problem Requires Time Value of Money

question 126

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.
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David,a high school math teacher,wants to set up an IRA account into which he will deposit $2,000 per year.He plans to teach for 20 more years and then retire.If the interest on his account is 7% compounded annually,how much will be in his account when he retires?

• A)$4,800
• B)$21,118
• C)$74,458
• D)$81,990

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Definitions:

IUPAC Name

The systematic naming of chemical substances as per the rules established by the International Union of Pure and Applied Chemistry.

Primary Alcohol

An organic compound with a hydroxyl group (-OH) attached to a primary carbon atom.

Secondary Alcohol

An alcohol in which the hydroxyl (-OH) group is attached to a carbon atom that is connected to exactly two other carbon atoms.

Tertiary Alcohol

An alcohol in which the hydroxyl group (-OH) is attached to a carbon atom that is connected to three other carbon atoms.