Determine the Principal P (To the Nearest Cent)that Will Yield $A = 500,000$

question 20

Multiple Choice

Determine the principal P (to the nearest cent) that will yield a balance of $A = 500,000$ dollars when invested at rate $r = 6.5 \%$ for 40 years, compounded 12 times per year. Round the answer to two decimal places.

• A)$973.96
• B)$273,927.55
• C)$16,025.64
• D)$37,398.27
• E)$402,834.63

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Definitions:

Contribution Margin

Contribution Margin is the amount of revenue remaining after deducting variable costs, which can then be used to cover fixed costs or generate profit.

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period, culminating in the net income or loss.

Contribution Format

A type of income statement where costs are divided into variable and fixed categories, enabling analysis of contribution margin.

Variable Expense Ratio

The ratio of variable costs to total sales, indicating how variable expenses change with sales levels.