Financing Final

53) Elle was in a 25% tax bracket and received a $1,000 tax credit, by how much would her taxes be reduced? A) $1,000 B) $250 C) $50 D) $25 E) $500

A) $1,000

5) Lia wants to buy a new car. She needs a loan for $ 12,000. The local credit union offers her a 60-month loan at a rate of 3.6%. The total interest paid over the life of the loan is A) $1,130 B) $1,520 C) $1,196 D) $1,328 E) $1,615

A) $1,130

27) Using the following table, calculate the taxes for an individual with taxable income of $30,000. 10% Up to $8,500 15% $8,500-$34,500 25% $34,500-$83,600 28% $83,600-$174,400 33% $174,400-$379,150 35% Over $379,150 A) $4,075 B) $2,125 C) $4,500 D) $850 E) $6,025

A) $4,075

17) If you have a $150,000 30-year 5% mortgage, how much of you pay monthly? A) $805 B) $765 C) $912 D) $798 E) $825

A) $805

8) Which of the following situations describes a person who could be insolvent? A) Assets $40,000; liabilities $55,000 B) Assets $78,000; net worth $22,000 C) Liabilities $45,000; net worth $6,000 D) Assets $56,000; annual expenses $60,000 E) Annual cash inflows $45,000; liabilities $50,000

A) Assets $40,000; liabilities $55,000

22) Paul just submitted an offer on his dream home. As evidence of good faith, he also included A) Earnest money. B) A counteroffer C) An appraisal. D) A contingency clause. E) A dual agent.

A) Earnest money.

32) A legal document that includes information about the due date of monthly rent is called a A) Lease. B) Lessor. C) Sublease. D) Rental statement. E) Lessee.

A) Lease.

38) Which of the following are two personal financial statements that you create yourself? A) Personal balance sheet and cash flow statement B) Checkbook and budget C) Budget and credit card statements D) Tax returns E) Bank statement and a balance sheet

A) Personal balance sheet and cash flow statement

40) Ruth paid extra money to reduce her mortgage interest rate. That extra money is called: A) Points. B) Lock. C) PMI. D) Amortization. E) Escrow.

A) Points.

1) These products are sold by one chain of stores and are low-cost alternatives to famous-name products. A) Private-label or store brands. B) Replacement brands. C) National brands. D) Counterfeit brands. E) All of these are correct.

A) Private-label or store brands.

36) Which of the following expenses is NOT usually incurred by a tenant? A) Property taxes. B) Renter's insurance. C) Utilities (other than water). D) Security deposit. E) None of these are incurred.

A) Property taxes.

17) Income that is taxed at a later date is A) Tax-exempt income. B) Adjusted gross income. C) Earned income. D) Tax-deferred income. E) Exclusions from income.

A) Tax-exempt income.

45) Disposable income equals A) The amount a person or household has to spend. B) Social Security taxes. C) Gross income. D) Money left over after paying for housing, food, and other necessities. E) The amount being saved each month.

A) The amount a person or household has to spend.

18) At the end of the year, employees receive a ________ form that reports annual earnings and the amounts deducted for taxes from their employers. A) W-2 B) Schedule A C) 1040 D) 1099 E) W-4

A) W-2

21) May wants to purchase a larger house. However, she has not yet sold her current home. She may want to include a(n) ________ in her offer. A) appraisal B) purchase agreement C) counteroffer D) dual agent E) contingency clause

A) appraisal

11) The difficulty of converting savings and investments to cash is referred to as ________ risk. A) liquidity B) personal C) inflation D) income E) interest-rate

A) liquidity

47) Information gathering is part of the ________ phase of the research-based buying process. A) pre-shopping activities B) post-purchase activities C) evaluating alternatives D) ordering activities E) selection and purchase

A) pre-shopping activities

30) Ella is looking for a new apartment. What are her total annual costs associated with renting? • Monthly rent payments $ 1,000 • Annual renter's insurance $ 250 • Annual interest lost on security deposit $ 20 • Value of apartment $ 150,000 A) $12,000 B) $12,270 C) $12,250 D) $1,270 E) $162,270

B) $12,270

12) Mark can afford a monthly mortgage payment of $900. If he is eligible for a 30-year, 5% mortgage, how much of a mortgage loan can he afford? A) $150,349 B) $167,653 C) $191,569 D) $186,739 E) $205,101

B) $167,653

33) Using the following information, what is the cost to buy a car? • Down payment $3,000 • Monthly loan payment $350 per month for a six-year loan • Opportunity cost of down payment $3,000 × loan period (in years) × 2% interest • Estimated value of vehicle at end of ownership period $4,000 A) $25,200. B) $24,560. C) $28,200. D) $3,000. E) $21,200.

B) $24,560.

23) Eva had three accounts as listed below. In 2019, how much was her total insurance coverage by the FDIC? • Bank A: $150,000 • Bank B: $50,000 • Bank C: $350,000 A) $200,000 B) $450,000 C) $350,000 D) $150,000 E) $550,000

B) $450,000

31) Mia lost her debit card. When she realized it was gone, her account had $573 in unauthorized charges. She notified her financial institution within two days. How much is she potentially liable for? A) $0. B) $50. C) $500. D) $573. E) $250.

B) $50.

34) Using the following table, calculate the taxes for an individual with taxable income of $45,000. 10% Up to $8,500 15% $8,500-$34,500 25% $34,500-$83,600 28% $83,600-$174,400 33% $174,400-$379,150 35% Over $379,150 A) $45,000. B) $7,375 C) $6,025 D) $20,900 E) $8,625

B) $7,375

24) Jim borrowed $2,400 for two years and paid $480 in interest. If Jim repaid the loan in 24 equal monthly payments, what is the APR? (Hint: apply the APR formula, N=24, n=12) A) 21.1% B) 19.20% C) $25.0% D) 22.0% E) 20.0%

B) 19.20%

25) Liz borrowed $100 from her cousin at the rate of 5% per year. If the inflation rate was 2% that year, what is her cousin's actual rate of return on the loan? A) 7% B) 3% C) 2.5% D) 2% E) 5%

B) 3%

2) What is the APY for a savings account with a $500 balance that receives $18 interest for the year? A) 2.5% B) 3.6% C) 9.00% D) 18.00% E) 4.32%

B) 3.6%

13) A credit report includes A) Bank statements B) Detailed credit information C) All previous employers D) Credit card statements E) All of these.

B) Detailed credit information

19) Fees, tips, and bonuses are forms of A) Tax-exempt income. B) Earned income. C) Tax-deferred income. D) Passive income. E) Exclusions from income.

B) Earned income.

28) A tax due on the purchase of gasoline is called a(n) A) Inheritance tax. B) Excise tax. C) Income tax. D) Real estate property tax. E) Estate tax.

B) Excise tax.

21) A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities is a(n) A) Statement. B) Financial plan. C) Investment forecast. D) Budget. E) Insurance prospectus.

B) Financial plan.

47) A debt ratio of 0.5 indicates A) For every dollar of take-home pay, monthly credit payments equal $0.50. B) For every dollar of net worth, debt equals $0.50. C) For every dollar of assets, monthly credit payments equal $0.50. D) The balance on the mortgage = 50% of the value of the home. E) For every dollar of debt, net worth equals $0.50.

B) For every dollar of net worth, debt equals $0.50.

6) The amount you would have left if all assets were sold and all debts were paid in full is called your A) Net assets. B) Net worth. C) Budgeted expenses. D) Total income. E) Total liabilities.

B) Net worth.

18) Which of the following are associated with a vehicle lease? A) Money factor. B) Payment schedule. C) Capitalized cost. D) Residual value. E) All of these.

B) Payment schedule.

20) The minimum monthly payment on a credit card is A) The amount needed to pay off the credit card in one year. B) The smallest amount you can pay and remain a borrower in good standing. C) The minimum to be paid to avoid any charges or fees. D) The amount to be paid without paying interest. E) The interest amount charged for the month.

B) The smallest amount you can pay and remain a borrower in good standing.

31) Which of the following appears as a cash outflow on a cash flow statement? A) Personal possessions B) Variable expenses C) Liquid assets D) Real estate assets E) Net worth

B) Variable expenses

41) If you think a bill is wrong or you want more information about the bill, then you and your creditor should follow all of the steps here except A) You should pay the portion of the bill that is not in question. B) Your creditor must reimburse you for your time spent researching the error. C) Your creditor must adjust your account or tell you why the bill is correct within two billing cycles. D) You should notify your creditor in writing. E) Your creditor must acknowledge your letter within 30 days.

B) Your creditor must reimburse you for your time spent researching the error.

37) Bob wants to retire in 20 years with $1,000,000. If he can earn 10% per year on his investments, how much does he need to deposit each year to reach his goal? A) $18,000 B) $5,727 C) $17,460 D) $25,000 E) None of these choices are correct.

C) $17,460

16) Lia wants to buy a new car. She needs a loan for $ 12,000. The local credit union offers her a 6-year loan at a rate of 4.8%. Her monthly payment is A) $152 B) $320 C) $192 D) $196 E) $161

C) $192

51) Kurt is in the process of getting a loan to buy a new car. He needs to borrow $ 18,000 What are the yearly payments on a 5-year loan at an annual interest rate of 4.5? A) $3,990 B) $4,250 C) $4,100 D) $3,763 E) $4,851

C) $4,100

46) Ann budgeted $1,200 for housing and utilities in July. She actually spent $1,160. What is her budget variance? A) $60 deficit B) $1,160 deficit C) $40 surplus D) $40 deficit E) $1,160 surplus

C) $40 surplus

14) A family with $100,000 in assets and $60,000 of liabilities would have a net worth of A) $60,000. B) $160,000. C) $40,000. D) $20,000. E) $100,000.

C) $40,000.

35) Ken paid taxes of $4,375 on a taxable income of $32,000. What was his average tax rate? A) 10% B) 15% C) 13.7% D) 28% E) 25%

C) 13.7%

48) Given the following information, calculate the liquidity ratio: Liabilities = $25,000 Liquid assets = $5,000 Monthly credit payments = $800 Monthly savings = $760 Net worth = $75,000 Current liabilities = $2,600 Take-home pay = $2,300 Gross income = $3,500 Monthly expenses = $2,050 A) 6.25 B) 2.50 C) 2.44 D) 0.41 E) 0.16

C) 2.44

52) Given the following information, calculate the current ratio: Liquid assets = $5,000 Monthly credit payments = $800 Monthly savings = $760 Net worth = $75,000 Current liabilities = $2,000 Take-home pay = $2,300 Gross income = $3,500 Monthly expenses = $2,050 A) 2.44 B) 6.25 C) 2.50 D) 0.41 E) 0.16

C) 2.50

33) Place the following steps for a personal financial plan in the proper order: 1. Review and revise the financial plan 2. Identify alternative courses of action 3. Create and implement your financial action plan 4. Determine your current financial situation 5. Evaluate alternatives 6. Develop your financial goals A) 6, 1, 2, 5, 3, 4 B) 4, 2, 6, 5, 3, 1 C) 4, 6, 2, 5, 3, 1 D) 3, 6, 4, 2, 5, 1 E) 6, 2, 5, 4, 1, 3

C) 4, 6, 2, 5, 3, 1

49) If inflation is expected to be 8 percent, how long will it take for prices to double? A) 18 years B) 7 years C) 9 years D) 6 years E) 12 years

C) 9 years

14) Ann wants to open an account, but she doesn't know which kind is appropriate. She is interested in earning a higher interest rate and plans to keep at least $1,000 in her account so she can avoid paying a fee. Ann wants to open her account at an investment company and understands that her account will not be covered by federal deposit insurance. What kind of account should she open? A) An interest-earning checking account B) A money market account C) A money market fund D) A certificate of deposit E) A regular savings account

C) A money market fund

7) Which of the following will likely provide the most expensive loans? A) A credit card company B) A finance company C) A payday loan company D) An investment company E) A life insurance company

C) A payday loan company

29) Individuals can file their federal taxes using all of the following except A) Use tax preparation software to file online. B) Use tax preparation software to print and mail. C) Deliver in person. D) Electronic filing using Free File Alliance. E) All of these can be used.

C) Deliver in person.

39) A tax imposed on the value of a person's property at the time of death is called a(n) A) Real estate property tax. B) Sales tax. C) Estate tax. D) Income tax. E) Excise tax

C) Estate tax.

26) Most products come with some guarantee of quality. This type of warranty states that a defective product can be fixed or replaced during a reasonable amount of time. A) Limited warranty B) Implied warranty C) Full warranty D) "As-is" warranty E) Express warranty

C) Full warranty

12) Tim received a $500 gift from his grandparents. He wants to invest this money for the down payment of a house that he plans to purchase in 3 years. What type of computation should he use? A) Simple interest B) Present value of an annuity C) Future value of a single amount D) Future value of an annuity E) Present value of a single amount

C) Future value of a single amount

40) The rate used to calculate the tax due on the next dollar of income is referred to as the A) AMT. B) Total tax rate. C) Marginal tax rate. D) Income tax rate. E) Average tax rate.

C) Marginal tax rate.

35) Which of the following is an advantage of a car lease? A) At the end of the lease, you have no ownership interest in the vehicle. B) The total cost of a lease may be higher than a purchase. C) Monthly lease payments are usually lower than monthly financing payments. D) The capitalized cost is usually higher than the list price. E) A large down payment is required.

C) Monthly lease payments are usually lower than monthly financing payments.

36) The statement that includes liquid assets, real estate, personal possessions, and investment assets is known as a A) Cash flow statement. B) Time value of money report. C) Personal balance sheet. D) Bank statement. E) Budget

C) Personal balance sheet.

42) Opportunity cost refers to A) Money needed for major consumer purchases. B) Evaluating different alternatives for financial decisions. C) What you give up by making a choice. D) The amount paid for taxes when a purchase is made. E) Current interest rates.

C) What you give up by making a choice.

4) Nick earned 4% in his savings account. If he is in the 28% tax bracket, what is his after-tax savings rate of return? A) 1.12% B) 5.56% C) 2.50% D) 2.88% E) 2.80%

D) 2.88%

41) Zoe is in the process of getting a loan to buy a new car. Zoe knows she can afford yearly payments of $ 4,000 for 6 years. How much can she borrow today if the interest rate is 4.8% annually? A) $20,561 B) $20,995 C) $22,231 D) $20,433 E) $19,456

D) $20,433

32) If Sue begins saving $2,000 a year at 5% (from age 22 to age 30 or 9 years), what will these funds grow to in this time period? A) $30,500 B) $18,000 C) $11,970 D) $22,054 E) $2,000

D) $22,054

6) Fred received a $1,400 loan from the bank for a new appliance. The bank is using the simple interest formula for this 30-month, 8% loan. What is his total interest? A) $336 B) $240 C) $112 D) $280 E) $224

D) $280

27) If an adjustable-rate mortgage for $120,000 starts at 6.0 percent and increases to 6.6 percent, what is the increase in the monthly payment amount? Assume a remaining loan life of 10 years. (Hint: Estimate the two payment amounts and take the difference) A) $22.50 B) $38.47 C) $18.58. D) $36.44 E) $28.45

D) $36.44

15) Given the following information, calculate the savings ratio: Liabilities = $25,000 Liquid assets = $5,000 Monthly credit payments = $800 Monthly savings = $760 Net worth = $75,000 Current liabilities = $2,000 Take-home pay = $2,300 Gross income = $3,500 Monthly expenses = $2,050 A) 3.06% B) 34.78% C) 33.79% D) 21.71% E) 2.40%

D) 21.71%

46) All of the following are non-deposit institutions except A) An investment company. B) A finance company. C) A life insurance company. D) A credit union. E) A credit card company.

D) A credit union.

45) A drawback of a regular savings account is A) Not being insured. B) A minimum required deposit. C) A possible penalty for early withdrawal. D) A relatively low rate of return. E) All of these are drawbacks of a regular savings account.

D) A relatively low rate of return.

44) The document that would tell you what you received and spent over the past month is the A) Balance sheet. B) Credit card statement. C) Budget. D) Cash flow statement. E) Bank statement.

D) Cash flow statement.

10) Which of the following is the document that transfers ownership of property from one party to another? A) Points B) Escrow C) PMI D) Deed E) Mortgage

D) Deed

43) To develop financial goals, one should A) Focus on intermediate goals first B) Not worry about whether or not the goals can be achieved based on one's income and life situation C) Only set long-term goals after short-term goals have been accomplished D) Identify specific, realistic goals that are measurable along with a time frame and an action plan E) Set several general goals for the short-term

D) Identify specific, realistic goals that are measurable along with a time frame and an action plan

37) Which of the following is correct about inflation? A) If you earn 5% and inflation is 10%, your buying power will increase. B) As the inflation rates increases, the interest rates offered to savers decrease. C) Inflation does not affect interest rates for savings accounts. D) In order to increase buying power, you need to earn a rate higher than the rate of inflation. E) If inflation is 7% and your rate of return in your savings account is 4%, you will experience an overall gain in buying power.

D) In order to increase buying power, you need to earn a rate higher than the rate of inflation.

34) A joint account with Kim and Jim allows A) Only Jim to write checks. B) Only Kim to write checks. C) Kim or Jim to complete a signature card. D) Kim or Jim to write checks on the account. E) All of these.

D) Kim or Jim to write checks on the account.

23) Which of the following ratios indicates the number of months in which living expenses can be paid if an emergency arises? A) Savings ratio B) Current ratio C) Debt ratio D) Liquidity ratio E) Debt payments ratio

D) Liquidity ratio

16) Joe needs to complete his income taxes for the year. He has already calculated his adjusted gross income. What does he need to do next? A) Add his tax credits. B) Add his tax exemptions. C) Subtract his tax-exempt income. D) Subtract his deductions (itemized or standard) E) Add his tax-exempt income

D) Subtract his deductions (itemized or standard)

15) Which of the following is a disadvantage of renting? A) Renters usually do not have to be concerned with maintenance and repairs. B) Renting can be more convenient for those who move frequently. C) Renters have fewer responsibilities than home owners. D) Tenants cannot take tax deductions for mortgage interest and property taxes. E) Taking possession of a rental unit is less expensive than buying a home.

D) Tenants cannot take tax deductions for mortgage interest and property taxes.

20) The Rule of 72 is: A) The number of steps required to complete a financial plan B) A tool to determine the number of years until retirement for an employee C) Used to calculate interest rates for savings D) Used to estimate how fast prices will double using a given annual inflation rate E) The legal code for requiring companies to provide a match on retirement savings

D) Used to estimate how fast prices will double using a given annual inflation rate

28) Acme Home Lending offers home equity loans up to 80% of the home value for its customers. If Ivy has a home valued at $200,000 and a current mortgage of $50,000, how much can she borrow in a home equity loan from Acme? A) $80,000 B) $150,000 C) $50,000 D) $160,000 E) $110,000

E) $110,000

5) Brett is completing his federal income taxes for the year and has identified the amounts listed here. How much can he list as itemized deductions? The threshold for medical and dental expenses is 10% of AGI • AGI: $80,000 • Medical and dental expenses: $9,000 • State income taxes: $3,500 • Mortgage interest: $9,500 • Charitable contributions: $1,000 A) $19,500. B) $23,000. C) $13,500. D) $14,000. E) $15,000.

E) $15,000

3) If a $10,000 investment earns a 7% annual return, what should its value be after 6 years? A) $10,700 B) $15,000 C) $10,000 D) $15,100 E) $15,010

E) $15,010

50) If Jack was in a 25% tax bracket and received a $1,000 tax deduction, by how much would his taxes be reduced? A) $1,000 B) $500 C) $50 D) $25 E) $250

E) $250

11) If you have a $250,000 30-year 5% mortgage, how much of your first monthly payment of $1,342 would go toward principal? A) $1042 B) $1,342 C) $342 D) $250 E) $300

E) $300

43) Suppose you borrow $500 for one year and pay a finance charge of $20. If you repay this loan all at once after one year, what is your average balance? A) $260 B) $520 C) $250 D) $270 E) $500

E) $500

7) If Sam wants $1,000 three years from now and you earn 4 percent on your savings, how much does he need to deposit now? A) $1,030 B) $1,000 C) $885 D) $1,040 E) $889

E) $889

9) Amy has liabilities totaling $30,000 (excluding her mortgage of $100,000). Her net worth is $45,000. What is her debt-to-equity ratio? A) 1.30 B) 0.45 C) 1.00 D) 0.75 E) 0.67

E) 0.67

39) Tim has net monthly income of $3,800. He has a monthly auto loan payment of $350, a student loan payment of $150, a mortgage payment of $1,200, and a credit card minimum payment of $45. What is his debt-payments-to-income ratio? A) 42.0% B) 13.2% C) 45.9% D) 36.7% E) 14.3%

E) 14.3%

4) Given the following information, calculate the debt payments ratio: Liabilities = $25,000 Liquid assets = $5,000 Monthly credit payments = $800 Monthly savings = $760 Net worth = $75,000 Current liabilities = $2,000 Take-home pay = $2,300 Gross income = $3,500 Monthly expenses = $2,050 A) 21.71% B) 33.79% C) 3.06% D) 2.40% E) 34.78%

E) 34.78%

25) Evan is not concerned about immediate tax benefits but instead wants his investment to grow in value on a tax-free basis. Which of these would be the best for him to invest in today? A) A Section 529 savings plan B) A tax-deferred annuity C) A 401(k) plan D) Municipal bonds E) A Roth IRA

E) A Roth IRA

22) Which of the following is a liquid asset? A) Savings/money market accounts B) Cash surrender value of life insurance C) Money market accounts D) Checking account balance E) All of these are liquid assets

E) All of these are liquid assets

13) Which of the following is a component of money management? A) Creating and implementing a plan for spending and saving. B) Creating a cash flow statement. C) Creating a balance sheet. D) Storing and maintaining personal financial records and documents. E) All of these choices are components of money management.

E) All of these choices are components of money management.

2) The main purposes of personal financial statements are to A) Measure your progress toward financial goals. B) Report your current financial position. C) Provide data for preparing tax forms or applying for credit. D) Maintain information about your financial activities. E) All of these choices are correct

E) All of these choices are correct

8) What should a home buyer consider when evaluating a house? A) School system. B) Location of businesses and future construction projects. C) Zoning laws. D) Property values of the community. E) All of these should be evaluated

E) All of these should be evaluated

29) When misused, credit can result in A) Loss of creditworthiness. B) Default. C) A less satisfying life. D) Bankruptcy. E) All the choices are correct.

E) All the choices are correct.

10) The problem of bankruptcy is associated with overuse and misuse of credit in the ________ component of financial planning. A) Sharing B) Obtaining C) Protecting D) Savings E) Borrowing

E) Borrowing

19) The question "Will you repay the loan?" relates to A) Collateral. B) Character. C) Capacity. D) Conditions. E) Capital.

E) Capital.

44) If you miss payments on a home equity loan, you can lose your A) Car. B) Savings account. C) Furnishings. D) Retirement account. E) House.

E) House.

9) Which of the following long-term goals is stated most clearly using the SMART approach? A) Buy a car for less than $15,000 within 6 months B) Retire in 10 years at age 65 C) Purchase a house with a mortgage no greater than $150,000 within 5 years D) Set up an emergency fund E) Invest $50 per month for the next 12 years for my nephew's college fund

E) Invest $50 per month for the next 12 years for my nephew's college fund

30) A personal balance sheet reports A) Family financial goals. B) Earnings on savings and investments. C) Income and expenses for a period of time. D) Amounts budgeted for spending. E) Items owned, amounts owed, and your net worth.

E) Items owned, amounts owed, and your net worth.

26) A worker's primary goal should be to A) Pay no taxes of any type. B) Pay the average tax rate for people working in his or her industry. C) Pay no income taxes. D) Pay his or her taxes using estimates for income and deductions. E) Pay his or her fair share of taxes while taking advantage of appropriate tax benefits.

E) Pay his or her fair share of taxes while taking advantage of appropriate tax benefits.

24) Which of the following would increase the interest rate for a loan? A) Expected lower inflation B) Higher down payment C) Short time to maturity D) Lower consumer prices E) Poor credit rating

E) Poor credit rating

42) The text identifies several phases in the research-based buying process. The correct order of the phases is A) Pre-shopping activities, selection and purchase, evaluating alternatives, post-purchase activities. B) Evaluating alternatives, selection and purchase, pre-shopping activities, post-purchase activities. C) Post-purchase activities, evaluating alternatives, pre-shopping activities, selection and purchase. D) Evaluating alternatives, pre-shopping activities, selection and purchase, post-purchase activities. E) Pre-shopping activities, evaluating alternatives, selection and purchase, post-purchase activities.

E) Pre-shopping activities, evaluating alternatives, selection and purchase, post-purchase activities.

3) All of the following are warning signs of debt problems except A) You receive second and third payment due notices from creditors. B) The total balance on your credit cards increases every month. C) You use savings to pay for necessities such as food and utilities. D) You exceed the credit limits on your credit cards. E) You pay your credit card bills in full each period.

E) You pay your credit card bills in full each period.

Lia wants to deposit $150 per month into an account earning 4 percent for the next 3 years, so she can purchase a used car at that time. What type of computation would she use to determine the amount he will have accumulated for his purchase? A) Simple interest B) Present value of an annuity C) Present value of a single amount D) Future value of a single amount E) Future value of an annuity

E. Future Value of an annuity