You Are Considering Investing in a Bank Account That Pays

question 11

Multiple Choice

You are considering investing in a bank account that pays a nominal annual rate of 6%, compounded monthly. If you invest $5,000 at the END of each month, how many months will it take for your account to grow to $200,000? Round fractional years up.

• A) 33
• B) 37
• C) 41
• D) 45

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Definitions:

Short Run

in economics, refers to a period during which at least one input, such as plant size, is fixed and cannot be changed.

Long Run

A period of time in economics where all factors of production and costs are variable, allowing for complete adjustment to changes in market conditions.

Fixed Resource

An asset or input whose quantity cannot be altered in the short run for the production of goods and services.

Explicit Costs

Direct, out-of-pocket payments for inputs or resources used by a business, easily identifiable and recorded.