Future Value of an Annuity: Zhijie Jiang Is Saving to Buy

question 5

Multiple Choice

Future value of an annuity: Zhijie Jiang is saving to buy a new car in four years. She will save $5,500 at the end of each of the next four years. If she invests her savings at 6.75 per cent, how much will she have after four years? (Round to the nearest dollar.)

• A) $22,000
• B) $23,345
• C) $27,556
• D) $24,329

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Definitions:

IPOs

Initial Public Offerings, the process by which a private company becomes public by offering its shares for the first time to the public.

Expected Dollar Return

The forecasted amount of money in dollars that an investment is expected to return over a specific period.

Rights Offering

A way for companies to raise capital by giving existing shareholders the right to purchase additional shares at a discount.

Subscription Price

The cost at which investors can buy shares or units of an investment, often seen in mutual funds or newly issued stocks.