You Know You Will Need $25,000 at the End of 5

question 125

Multiple Choice

You know you will need $25,000 at the end of 5 years. How much would you have to deposit annually, starting at the end of the first year, into an account earning 10% to accumulate the needed amount?

• A)$3,980
• B)$4,095
• C)$4,435
• D)$4,973
• E)$5,886

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Definitions:

Premium Rate

The rate charged for an insurance policy, reflecting the cost of coverage.

Annual Premium

The annual premium is the total amount paid for an insurance policy in a year, covering the policyholder for a specified term.

Coinsurance Clause

An insurance policy clause specifying that, if a property is not insured up to a certain percentage of its value, the owner is the bearer of part of the insurance and will not be covered for the full amount of damages.

Premium Rate

The cost of an insurance policy per unit of coverage, reflecting the likelihood of a claim being made.