You Need a Down Payment of $17,200 in Order to Purchase

question 4

Multiple Choice

You need a down payment of $17,200 in order to purchase your first home 4 years from today.You currently have $14,014 to invest.In order to achieve your goal,what nominal interest rate,compounded continuously,must you earn on this investment? Do not round your intermediate calculations.

• A) 5.48%
• B) 5.12%
• C) 3.84%
• D) 4.46%
• E) 6.20%

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Definitions:

Incremental Cash Flows

The additional cash inflows or outflows expected from a new project or investment, compared to not undertaking the project.

Canadian Tax Law

Canadian Tax Law encompasses the rules, regulations, and procedures governing taxation in Canada, including income, corporate, and sales taxes.

Pro Forma Financial Statements

Financial statements projecting future years’ operations.

Incremental Cash Flows

The additional cash flow an investment brings over the base case or doing nothing.