For the Following Investments, Compute the Amount of Compound Interest

question 134

Short Answer

For the following investments, compute the amount of compound interest earned in one year and the annual percentage yield, rounding dollars to the nearest cent, and rate to the nearest hundredth: $$\begin{array} { l l l l l } & \text { Nominal } & \text { Interest } & \text { Compound Interest } & \text { Effective } \\\text { Principal } & \text { Rate } & \text { Compounded } & \text { Earnedin One Year } & \text { Rate } \\\$ 2,000 & 14 \% & \text { semiannually } & -----& -----\\\end{array}$$

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Definitions:

Accounting Profits

The financial gain calculated by subtracting total expenses from total revenues, according to standard accounting practices.

Long-Run Equilibrium

The state in which all factors of production and costs are variable, and firms earn normal profits in a competitive market.

Competitive Firm

A firm operating in a market with many competitors, where prices are determined by supply and demand forces.

Economic Profits

The difference between total revenue and total economic costs (including both explicit and implicit costs), representing surplus or profit not achievable in perfect competition.