You Want to Buy a Volvo in Seven Years

question 14

Multiple Choice

You want to buy a Volvo in seven years. The car is currently selling for $50,000, and the price will increase at a compound rate of 10% per year. You can presently invest in high-yield bonds earning a compound annual rate 14% per year. How much must you invest at the end of each of the next seven years to be able to purchase your dream car in seven years?

• A) $8,831.46
• B) $9,080.20
• C) $9,125.42
• D) $9,282.09

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Definitions:

IQ

An abbreviation for Intelligence Quotient, a score derived from standardized tests designed to measure human intelligence.

Cognitive Techniques

Therapeutic methods aimed at identifying and altering distorted or unhelpful patterns of thinking, part of cognitive-behavioral therapy.

Contingency Management

Contingency management is a behavioral therapy technique where desirable behaviors are reinforced with rewards, while undesirable behaviors are not, to promote behavior change.

Meta-analytic Studies

Research methods that statistically combine results from multiple studies on the same topic to derive conclusions about that topic's significance or effects.