How Much Must Be Deposited Today in an Account Earning

question 108

Multiple Choice

How much must be deposited today in an account earning 6 percent annually to accumulate a 20 percent down payment to use in purchasing a car one year from now, assuming that the car's current price is $20,000, and inflation will be 4 percent?

• A)$3,774
• B)$3,782
• C)$3,925
• D)$4,080 Need $20,800 x .2 = $4,160
• PV = $4,160/(1.06)

---

Definitions:

Government Accountants

Accountants who work within the public sector, responsible for managing and auditing the finances of government agencies.

Balance Sheet

A document that provides a snapshot of a corporation's financial status, by listing its assets, debts, and the equity available to its shareholders at a given time.

Financial Position

A snapshot of an entity's finances at a particular time, including assets, liabilities, and equity, showing its economic standing.

Liabilities

Financial obligations or debts that a business or individual owes to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.