Compound Interest Answers

The same amount of principal is invested in different accounts earning the same interest rate. Which of the following accounts would have the greatest accumulated value at the end of one year?a.An account earning no interestb.An account earning simple interestc.An account earning interest compounded annuallyd.An account earning interest compounded daily

You have $12,000 to invest and want to keep your money invested for 8 years. You are considering the following investment options. Choose the investment option that will earn you the most money.a.3.99% compounded monthlyb.4% compounded quarterlyc.4.175% compounded annuallyd.4.2% simple interest

An investment of $9,875 earns 4.8% interest compounded monthly over 12 years. Approximately how much interest is earned on the investment?a.$4,740b.$7,458c.$7,672d.$17,567

Certain investments compound interest at different intervals. What effect does the size of the compounding interval have on the yield of the investment?a.Investments with smaller compounding intervals have a higher yield, because the interest earned is reinvested more quickly and thus gains compound interest more quickly.b.Investments with smaller compounding intervals have a lower yield, because the interest earned is smaller at each interval.c.The size of the compounding interval does not affect the total yearly interest percentage rate and only exists for bookkeeping purposes.d.Investments with smaller compounding intervals have a lower yield, because the bank charges a small fee every time interest is compounded.

An investment of $2,000 is earning interest at the rate of 6.2% compounded quarterly over 5 years. Approximately how much interest is earned on the investment? a. $724.67 b. $2127.72 c. $720.37 d. $2720.37 Please select the best answer from the choices provided

Money is invested into an account earning 4.25% interest compounded annually. If the accumulated value after 18 years will be $25,000, approximately how much money is presently in the account?a.$5,875b.$11,820c.$19,125d.$23,960

Choose the proper rationale. “In the compound interest equation, time (the variable t) has the biggest effect on the outcome because...”a.Time is usually the largest number in the equation.b.Time uses the largest units (years are bigger than dollars or percentages).c.Time is an exponent while the other units are factors.d.Time is the independent variable.

How much more interest is earned on an investment of $12,585 at 3.5% interest over 5 years if the interest is compounded annually rather than earning simple interest?a.They are the same.b.$159.65c.$2,362.03d.$12,744.65

An investment of $7,650 earns interest at the rate of 5% and is compounded quarterly. What is the accumulated value of the investment at the end of 9 years?a.$11,964.17b.$11,867.66c.$9,338.56d.$8,554.94

Porsha calculates the amount of money she will have at the end of 6 years on a $5,000 investment earning 3.75% interest compounded quarterly. She writes the following expression: Which of the following statements about Porsha's expression is true? a. Porsha's expression is correct. b. Porsha's expression should have 1 + 0.009375 in the parentheses. c. Porsha's expression should have an exponent of 6, not 24. d. Porsha's expression should have both 1 + 0.009375 in the parentheses and an exponent of 6. Please select the best answer from the choices provided