Eighteen Years from Now, 4 Years of College Are Expected

question 7

Multiple Choice

Eighteen years from now, 4 years of college are expected to cost $150,000. How much more must be deposited into an account today to fund this expense if you could only earn 8% rather than the 11% you had hoped to earn on your savings?

• A) $12,211.18
• B) $13,609.21
• C) $14,006.41
• D)$14,614.03

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Definitions:

Payable to Order

A phrase indicating that a financial instrument, such as a check, is transferable to a specific person or entity mentioned in the document.

Negotiable

Referring to the ability of the terms of an agreement, document, or financial instrument to be adjusted or transferred in accordance with all parties' consent.

Certificates of Deposit

Financial instruments issued by banks that offer a fixed interest rate in exchange for keeping deposited funds untouched for a predetermined period.

Nonnegotiable

Pertaining to a term, condition, or instrument that cannot be altered or bargained upon, often legally or contractually fixed.