Rodget's Is Saving $2,500 a Month,starting Today,and Continuing for 4

question 45

Multiple Choice

Rodget's is saving $2,500 a month,starting today,and continuing for 4 years.The firm expects to earn 5.6 percent,compounded monthly.If the firm had wanted to deposit an equivalent lump sum today,how much would it have had to deposit?

• A)$107,286.58
• B)$108,601.95
• C)$105,330.60
• D)$107,787.25
• E)$108,998.01

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Definitions:

Floating-rate Debt

Floating-rate Debt refers to loans or bonds with a variable interest rate, which adjusts periodically based on a benchmark interest rate or index.

LIBOR

The London Interbank Offered Rate, which is a benchmark rate that some of the world’s leading banks charge each other for short-term loans.

Interest Expense

The cost incurred by an entity for borrowed funds over a period, including loans, bonds, or credit lines.

Floating-rate Debt

A form of debt where the interest rate varies over time based on a benchmark interest rate or index.