(Appendix 8A)(Ignore Income Taxes in This Problem

question 6

Multiple Choice

(Appendix 8A) (Ignore income taxes in this problem. ) James just received an $8, 000 inheritance check from the estate of his deceased rich uncle.James wants to set aside enough money to pay for a trip in five years.If the trip is expected to cost $5, 000, how much of the $8, 000 must James deposit now if the rate of return is 12% per year in order to have the $5, 000 in five years?

• A)$2, 535
• B)$2, 835
• C)$2, 000
• D)$5, 000

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Definitions:

Compensatory Damages

Financial compensation awarded to a plaintiff to cover losses directly resulting from the defendant's wrongful action, intended to restore the injured party to their original position.

Erroneous Denial

A decision to reject or refuse something, such as a claim or request, that is based on incorrect or faulty reasoning.

Settlement

An agreement reached by parties in a lawsuit before the case goes to trial or a final judgment is issued.

Litigation

The process of taking legal action or engaging in a lawsuit to resolve disputes between parties.