Question

at Pro DC Fundamentals of LE CHOICE. Choose the one alternative that best completes the statement or answers the question. 2 Marie needs $26,000 as a down payment for a house 4 years from now. She earns 5.25% on her savings. Marie can either deposit one lump sum today for this purpose or she can wait a year and deposit a lump sum. How much additional money must Marie deposit if she waits for one year rather than making the deposit today? A) $1,348.03 B) $911.13 C) $1,112.36 D) $878.98 E) $1,420.18 Answer: C Courtney invests $1,200 today. If she can earn a 13.25% rate of return for the next two years, how much money will she have at the end of the two years? A) $1,232.01 B) $1,742.99 C) $1.203.18 D) $1,539.07 E) $1,359.04 nswer: D you leave the money of $950 in the account for five years and the account earns 8% compounde nually, what will the balance in the account grow to? A) $1,491.15 B) $1,347.82 C) $1,406.23 D) $1,341.05 E) $1,395.86 swer: E O BI BIS 14 15 16 FO 111 E3 12 O/ S 9: A ? 3 il 4 5 6 7 9 8 0 Me £ 2 2

Answer 1

*We are only supposed to answer one question*

Question

Marie needs $26,000 4 years from now.

To compute the lumpsum amount she needs to invest now, we will use BA 2 plus financial calculator:

N: 4

I/Y: 5.25%

FV: $26,000

CMPT PV
lumpsum amount she needs to invest 1 year from now = $21,187.75

If she plans to deposit one year from now then she will only be left with 3 years

To compute the lumpsum amount she needs to invest 1 year from now we will use BA 2 plus financial calculator:

N: 3

I/Y: 5.25%

FV: $26,000

CMPT PV
lumpsum amount she needs to invest 1 year from now = $22,300.11

Additional amount required = $22,300.11 - $21,187.75 = $1112.36

Hence, Option C is the answer.