International Baccalaureate (IB) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the International Baccalaureate Exam with comprehensive quizzes including multiple choice questions and detailed explanations to boost your confidence. Hone your skills with our expertly crafted materials!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

Using the sinking fund approach, how much do you have to save each month to buy a $4,800 car one year from now?

$500
$275
$300
$400

The correct answer is: $400

To determine how much needs to be saved each month using the sinking fund approach, it's essential to accumulate enough funds to meet the total cost of the car, which is $4,800, over the span of one year. In this method, the total amount desired is divided by the number of months to save. Since there is one year to save for the purchase, the calculation involves taking the total amount and dividing it by 12 months. When you perform the calculation $4,800 divided by 12, you arrive at $400. This means that in order to gather the full amount needed to purchase the car, one must save $400 each month. This savings strategy ensures that the required amount will be available at the end of the year, thus fulfilling the goal of purchasing the car without needing to rely on any additional financing or loans. Thus, budgeting $400 each month will effectively meet the target amount in a systematic manner.