Which One of the Following Interest Rates Will Produce the Largest

question 247

Multiple Choice

Which one of the following interest rates will produce the largest value at the end of ten years given a lump sum investment of $5,000?

• A) 5.5%, compounded annually
• B) 5.5%, simple interest
• C) 6.0%, simple interest
• D) 6.0%, compounded annually
• E) 6.0%, compounded semi-annually

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Definitions:

LIFO

Last In, First Out, an inventory valuation method where the last items placed in inventory are the first ones sold.