You Received a $5,000 Loan at the End of Each

question 9

Multiple Choice

You received a $5,000 loan at the end of each of your four years of college. Your grandparents agreed to pay off your loans at the end of your fourth year of school. Assume a 4% annual compound interest rate on student loans. How much will they have to deposit when you start school so that they will have enough money to pay off your loans after four years? Their interest rate is 6% compounded annually.

• A) $20,000.
• B) $21,235.
• C) $16,818.
• D) $15,000.
• E) None of the other answers are correct.

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Definitions:

Demand Curve

An image that depicts how the price level of a good or service influences its required quantity within a designated period.

Number of Buyers

The total quantity of individuals or entities in a market that are potential or actual purchasers of goods and services.

Complement

A good or service that is used in conjunction with another good or service, often enhancing the value or use of the primary product.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price within a specified time period.