You Are Choosing Between Investments Offered by Two Different Banks

question 165

Multiple Choice

You are choosing between investments offered by two different banks. One promises a return of 10% for three years using simple interest while the other offers a return of 10% for three years using compound interest. You should:

• A) Choose the simple interest option because both have the same basic interest rate.
• B) Choose the compound interest option because it provides a higher return.
• C) Choose the compound interest option only if the compounding is for monthly periods.
• D) Choose the simple interest option only if compounding occurs more than once a year.
• E) Choose the compound interest option only if you are investing less than $5,000.

Understand vendor management and transactions in QuickBooks.

Gain insights into the categorization of items within QuickBooks (Inventory, Non-inventory, and Service items).

Understand how to manage sales tax within QuickBooks.

Learn the sequence of business activities as they relate to purchasing and inventory management in QuickBooks.

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Definitions:

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder value maximization, such as new machinery, replacement of machinery, new plants, and research development projects.

Straight-Line Depreciation

An approach for distributing the cost of a physical property over its useful life in uniform annual sums.

Straight-Line Depreciation

A strategy for apportioning the cost of an asset consistently throughout its period of use.

Capital Budgeting

The process of evaluating and selecting long-term investments that are consistent with the firm's goal of value maximization.