You Invest $1,000 at Age 20 at an Annual Rate

question 36

Multiple Choice

You invest $1,000 at age 20 at an annual rate of return of 12%.By the time you are 62 you will have amassed approximately

• A)$47,040.
• B)$67,214.
• C)$116,723.
• D)$504,000.

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Definitions:

Economic Sacrifice Approach

An accounting method focusing on recognizing expenses based on the economic sacrifices made, rather than when cash transactions occur.

Current Cost

The cost that would be incurred to replace an asset or settle a liability at the current time.

Useful Life

The estimated duration of time that an asset is expected to be usable for its intended purpose.

Imputed Interest Charge

An estimated interest rate used in transactions where no interest or an unrealistic interest rate is charged.