If Sandy Has $7,000 Today and Invests It for Five

question 16

Multiple Choice

If Sandy has $7,000 today and invests it for five years at a 5 percent interest rate,how much will she have in five years?

• A)$8,750
• B)$7,850
• C)$8,932
• D)$8,857

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Definitions:

Federal Income Taxes

Taxes levied by the U.S. federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Itemized Deduction

involves subtracting eligible expenses from one's taxable income, instead of taking the standard deduction. These expenses are listed out or itemized on the tax return.

Schedule A

An IRS form used for itemizing deductions such as medical and dental expenses, taxes paid, interest paid, gifts to charity, and casualty and theft losses.

Qualified Residence

A primary or secondary home that meets certain IRS criteria, allowing for potential mortgage interest deductions.