Consider a $1,000 Deposit Earning 7 Percent Interest Per Year

question 13

Multiple Choice

Consider a $1,000 deposit earning 7 percent interest per year for four years. How much total interest is earned on the original deposit (excluding interest earned on interest) ?

• A) $28.00
• B) $30.00
• C) $280.00
• D) $310.00

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Definitions:

NPV

Net Present Value, a method used in capital budgeting to assess the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Conventional Capital Budgeting

A process of planning and evaluating large-scale investments and expenditures to optimize a company's capital expenditures and investments.

Forecasting Risk

The potential for a forecast to be inaccurate, which can lead to incorrect business decisions and financial performance assessments.

Sensitivity Analysis

A financial model technique used to determine how different values of an independent variable impact a particular dependent variable under a given set of assumptions.