The Estradas Are Planning to Buy a House 4 Year(s)

question 19

Multiple Choice

The Estradas are planning to buy a house 4 year(s) from now. Housing experts in their area have estimated that the cost of a home will increase at a rate of 8% / year during that 4-year period. If this economic prediction holds true, how much can they expect to pay for a house that currently costs $40,000? Round your answer to two decimal places.

• A) $54,742.76
• B) $54,419.56
• C) $55,026.64
• D) $55,085.11

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Definitions:

Retirement Account

A financial arrangement designed to replace employment income upon retirement, often offering tax benefits to encourage saving for the retirement years.

Retire

The process of leaving one's job and ceasing to work, typically due to age or health reasons.

Interest Rate

The percentage of a sum of money charged for its use, reflecting the cost of borrowing money or the return on invested funds.

Bond

A fixed income investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period at a variable or fixed interest rate.