Howard Is Saving for a Long Holiday

question 92

Multiple Choice

Howard is saving for a long holiday.He deposits a fixed amount every month in a bank account with an EAR of 7.5%.If this account pays interest every month then how much should he save from each monthly paycheck in order to have $10,000 in the account in two years' time?

• A)$161
• B)$166
• C)$388
• D)$4818
• E)$417

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Definitions:

Merged Firm

A company that results from the combination or amalgamation of two or more companies, integrating their operations, resources, and strategies.

Incremental Value

Incremental value is the additional value generated by a business from undertaking a specific project or action, compared to not doing it.

Outstanding Stock

Another term for outstanding shares; represents the total shares held by all shareholders, including shares held by institutional investors and company officials.