Determine the Amount That Must Be Deposited Today in Order

question 113

Multiple Choice

Determine the amount that must be deposited today in order for an investor to withdraw $400 per month for 3 years and have $10,500 remaining.Interest is assumed to be 6.45% compounded annually.

• A)$19,190
• B)$20,694
• C)$21,801
• D)$22,522

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Definitions:

Preferred Stock

A category of corporate ownership that has a greater entitlement to the company's assets and profits compared to common stock, typically receiving payouts before common stockholders.

Rate of Return

The profit or deficit yielded from an investment across a specific timespan, explicated as a percentage of the investment’s base cost.

Shares Purchased

Refers to the act of acquiring ownership in a company through the buying of shares, either in the open market or through an ownership stake.

Preferred Stock

A category of corporate equity that comes with predetermined dividend payouts, taking precedence over dividends distributed to common stockholders.