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:

Financial Incentive

Represents a monetary reward or benefit provided to motivate or encourage specific behaviors or actions.

Sociolinguistic Cultural Markers

Aspects of language use that indicate the cultural identity or social group membership of the speaker.

Ingroup Identification

Ingroup identification is the psychological process of aligning oneself with the norms, values, and behaviors of one's reference group, enhancing feelings of belonging and identity.

Expressive Intensity

The degree of strength or forcefulness with which emotions are expressed or communicated.