BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A $100 deposit today that earns an annual interest rate of 10% is worth how much at the end of two years? Assume all interest received at the end of the first year is reinvested the second year.
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$121
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$120
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$141
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$122
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Explanation:
Detailed explanation-1: -Answer: If the Interest Rate is 10 Percent, then the Future Value in Two Years of $100 Today is $120.
Detailed explanation-2: -Answer and Explanation: The calculated present value of $100 to be paid in 2 years is $82.64.
Detailed explanation-3: -Present value is the value today of an amount of money in the future. If the appropriate interest rate is 10 percent, then the present value of $100 spent or earned one year from now is $100 divided by 1.10, which is about $91.
Detailed explanation-4: -Answer and Explanation: The $100 investment becomes $161.05 after 5 years at 10% compound interest.
There is 1 question to complete.