Future Value: Ning Gao Is Planning to Buy a House

question 59

Multiple Choice

Future value: Ning Gao is planning to buy a house in five years. She is looking to invest $25,000 today in an index managed fund that will provide her a return of 12 percent annually. How much will she have at the end of five years? (Round to the nearest dollar.)

• A) $45,000
• B) $39,338
• C) $44,059
• D) $40,000

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Definitions:

Barriers

Obstacles or impediments that prevent or hinder access, movement, or progress within a particular area or context.

Perfect Competition

A market structure characterized by an infinite number of small firms, identical products, no barriers to entry or exit, and perfect information among buyers and sellers.

Maximizing Profit

The procedure a business uses to establish the optimal price and amount of production for the highest profit.

Total Profit

The total financial gain generated from a business activity after subtracting all expenses and costs associated with producing and selling goods or services.