You Deposit $100 in a Bank for a Fixed 7

question 102

Multiple Choice

You deposit $100 in a bank for a fixed 7 year term.Interest on the deposit is calculated every half-year (m = 2) at the rate of 5% per half-year (i/m = 5%) .Because the term is fixed,you are not allowed to withdraw interest at any point.You earn interest in the final compounding period of the term.How much of that interest is earned off of earlier interest (as opposed to earned off of the principal) ?

• A) $4.43
• B) $9.43
• C) $4.90
• D) $5.00
• E) $9.90

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Definitions:

Outsourced

The practice of hiring third-party vendors to perform services or produce goods that were previously done in-house.

Employee Relations

The management of interactions between the organization and its employees, aiming to maintain positive working relationships.

Succession Management

Identifying and grooming new leaders to succeed the current ones when they exit, retire, or are deceased.

Outsourcing

The business strategy of hiring external organizations to handle specific business tasks or operations that were previously conducted internally.