Compound Interest
9 practice questionsFinanceStep-by-step solutions
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1
What is the future value of $2,000 invested for 1 year at 8% compounded annually?
A.$2,080
B.$2,160
C.$2,800
D.$2,008
2
The effective annual rate (EAR) accounts for the effect of:
A.Inflation only
B.Compounding within the year
C.Taxes only
D.Currency exchange
3
Compared with simple interest, compound interest on the same principal and rate produces:
A.Less total interest
B.More total interest because interest earns interest
C.Exactly the same interest
D.No interest
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