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Which of the following has the largest future value if $1,000 is invested today?
- a)Five years with a simple annual interest rate of 10 percent
- b)10 years with a simple annual interest rate of 8 percent
- c)Eight years with a compound annual interest rate of 8 percent
- d)Eight years with a compound annual interest rate of 7 percent
Correct answer is option 'C'. Can you explain this answer?
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Which of the following has the largest future value if $1,000 is inves...
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Which of the following has the largest future value if $1,000 is inves...
To find out which option has the largest future value, we need to calculate the future value of each option using the given interest rates and time periods.
Option a:
Simple interest formula: FV = P(1 + rt)
FV = 1000(1 + 0.1 x 5) = 1500
Option b:
FV = 1000(1 + 0.08 x 10) = 1800
Option c:
Compound interest formula: FV = P(1 + r/n)^(nt)
FV = 1000(1 + 0.08/1)^(1 x 8) = 1850.93
Option d:
FV = 1000(1 + 0.07/1)^(1 x 8) = 1605.78
Therefore, option c has the largest future value of $1850.93. This is because compound interest earns interest on both the principal amount and the accumulated interest, leading to a higher future value compared to simple interest.
Option a:
Simple interest formula: FV = P(1 + rt)
FV = 1000(1 + 0.1 x 5) = 1500
Option b:
FV = 1000(1 + 0.08 x 10) = 1800
Option c:
Compound interest formula: FV = P(1 + r/n)^(nt)
FV = 1000(1 + 0.08/1)^(1 x 8) = 1850.93
Option d:
FV = 1000(1 + 0.07/1)^(1 x 8) = 1605.78
Therefore, option c has the largest future value of $1850.93. This is because compound interest earns interest on both the principal amount and the accumulated interest, leading to a higher future value compared to simple interest.
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Which of the following has the largest future value if $1,000 is invested today?a)Five years with a simple annual interest rate of 10 percentb)10 years with a simple annual interest rate of 8 percentc)Eight years with a compound annual interest rate of 8 percentd)Eight years with a compound annual interest rate of 7 percentCorrect answer is option 'C'. Can you explain this answer?
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Which of the following has the largest future value if $1,000 is invested today?a)Five years with a simple annual interest rate of 10 percentb)10 years with a simple annual interest rate of 8 percentc)Eight years with a compound annual interest rate of 8 percentd)Eight years with a compound annual interest rate of 7 percentCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following has the largest future value if $1,000 is invested today?a)Five years with a simple annual interest rate of 10 percentb)10 years with a simple annual interest rate of 8 percentc)Eight years with a compound annual interest rate of 8 percentd)Eight years with a compound annual interest rate of 7 percentCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following has the largest future value if $1,000 is invested today?a)Five years with a simple annual interest rate of 10 percentb)10 years with a simple annual interest rate of 8 percentc)Eight years with a compound annual interest rate of 8 percentd)Eight years with a compound annual interest rate of 7 percentCorrect answer is option 'C'. Can you explain this answer?.
Which of the following has the largest future value if $1,000 is invested today?a)Five years with a simple annual interest rate of 10 percentb)10 years with a simple annual interest rate of 8 percentc)Eight years with a compound annual interest rate of 8 percentd)Eight years with a compound annual interest rate of 7 percentCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following has the largest future value if $1,000 is invested today?a)Five years with a simple annual interest rate of 10 percentb)10 years with a simple annual interest rate of 8 percentc)Eight years with a compound annual interest rate of 8 percentd)Eight years with a compound annual interest rate of 7 percentCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following has the largest future value if $1,000 is invested today?a)Five years with a simple annual interest rate of 10 percentb)10 years with a simple annual interest rate of 8 percentc)Eight years with a compound annual interest rate of 8 percentd)Eight years with a compound annual interest rate of 7 percentCorrect answer is option 'C'. Can you explain this answer?.
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