Use the Present Value and Future Value Tables Included in Appendix

question 70

Multiple Choice

Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
- Assuming an interest rate of 12 percent, an ordinary annuity of eight annual $30,000 payments will grow to

• A) $74,279
• B) $149,029
• C) $368,991
• D) $569,314

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Definitions:

Price Index

An index number that shows how the weighted-average price of a “market basket” of goods changes over time relative to its price in a specific base year.

Real Wage

The purchasing power of a person's earnings, accounting for inflation, defining what goods and services can actually be bought with wages.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, intended to represent the monthly change in the price level experienced by consumers.

Nominal Wage Rate

The wage rate paid to employees unadjusted for inflation, representing the amount of money received per unit of time.