Maria Has Just Received an Inheritance of $89,218 and She

question 132

Multiple Choice

Maria has just received an inheritance of $89,218 and she is going to invest the money today at 10.5% compounded monthly. This money must provide her with $75,000 in eight years and $100,000 in twelve years. If the $89,218 isn't enough, she will add to the investment now from her other savings. If the $89,218 is more than enough she will spend the extra money. Which of the following statements is true?

• A) She must add $11,674 to the $89,218.
• B) She must add $85,782 to the $89,218.
• C) She has exactly the right amount of money now.
• D) She can spend $137,812 of the $89,218.
• E) She can spend $28,200 of the $89,218.

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Definitions:

MPC

The marginal propensity to consume, which is the fraction of additional income that a household spends on consumption.

Disposable Income

Financially viable resources for households' spending and saving strategies after deducting income taxes.

Consumption

The action of using up a resource or the purchase of goods and services by households.

APS

A generic term potentially referring to various organizations or concepts; without specific context, a precise definition cannot be provided. If referring to economic terms, it might be erroneous or too vague without further context.