Assume the retiree had a third option: receive a lump sum of 750,000 five years from now. If the interest rate is 4 percent, approximately how much is the future 750,000 to be received in 5 years worth today?
A) 586,445 B) 616,445 C) 630,000 D) 646,555
Scenario 12.1: Jennifer has decided to give up her pack-a-day smoking habit and invest the money she would have spent on cigarettes in a retirement account. At 6.00 a pack, Jennifer is currently spending 2,190 per year on cigarettes. Jennifer is 25 years old and plans to retire in 35 years, at age 60. She has chosen a retirement account that will earn a long-term average return of 5 percent per year. Jennifer is currently earning 40,000 annually. Assume that the average annual inflation rate will be 5 percent per year, that the cost of cigarettes will increase with inflation, and that Jennifer's income will also rise with the inflation rate.
Question 2
The exchange rate of a currency in a black market:
A) will be less favorable to sellers of domestic currency than the official exchange rate.
B) will be more favorable to sellers of domestic currency than the official exchange rate.
C) will be more favorable to both the sellers and the buyers of domestic currency than the official exchange rate.
D) will be less favorable to both the sellers and the buyers of domestic currency than the official exchange rate.
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