You Are Considering Two Savings Options

question 105

Multiple Choice

You are considering two savings options. Both options offer a 4% rate of return. The first option is to save $1,200,$1,500,and $2,000 a year over the next three years,respectively. The other option is to save one lump sum amount today. If you want to have the same balance in your savings at the end of the three years,regardless of the savings method you select,how much do you need to save today if you select the lump sum option?

• A) $4,318.67
• B) $4,491.42
• C) $4,551.78
• D) $4,607.23
• E) $4,857.92

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Definitions:

Penis Envy

A concept in psychoanalytic theory referring to a girl's sense of loss and inferiority upon realizing she does not have a penis, leading to feelings of jealousy towards males.

Karen Horney

Karen Horney was a psychoanalyst who postulated theories on neurosis, personality, and the importance of social and cultural factors in mental health, diverging from Freudian viewpoints.

Ego

In psychoanalytic theory, the part of the psyche that mediates between the demands of the id, the superego, and the external world.