Bill and Cathy Will Be Retiring in Fifteen Years and Would

question 97

Multiple Choice

Bill and Cathy will be retiring in fifteen years and would like to buy an Italian villa.The villa costs $500,000 today,and housing prices in Italy are expected to increase by 6% per year.Bill and Cathy want to make fifteen equal annual payments into an account,starting today,so there will be enough money to purchase the villa in fifteen years.If the account earns 10% per year,what is the amount of each deposit?

• A) $79,885
• B) $72,623
• C) $34,286
• D) $32,947

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Definitions:

Fiat Money

Currency that a government has declared to be legal tender, but it is not backed by a physical commodity.

The Euro

The official currency of 19 out of the 27 European Union countries, which forms a significant part of the world's economy.

Specialization In Production

The process by which individuals, businesses, or countries focus on producing a narrow range of goods or services to gain greater efficiencies.

Standard Of Living

Represents the level of wealth, comfort, material goods, and necessities available to a person, community, or society.