The Solution to This Problem Requires Time Value of Money

question 91

Multiple Choice

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. Ashley inherited $140,000 from an aunt.If Ashley decides not to spend her inheritance but to leave the money in her savings account until she retires in 15 years,how much money will she have assuming an annual interest rate of 8%,compounded semiannually?

• A)$ 308,000
• B)$ 509,880
• C)$ 454,020
• D)$7,851,900

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Definitions:

Cash Flows

The aggregate movement of liquid funds into and exiting from a corporation.

Cost of Money

Refers to the interest rate or the opportunity cost of borrowing or using money.

Car Dealer

A business that sells new or used cars at the retail level, typically based on a dealership contract with an automaker or sales subsidiary.

Lease

A contractual agreement where one party, the lessor, grants the other party, the lessee, the right to use an asset for a specified period in exchange for payment.