The Solution to This Problem Requires Time Value of Money

question 33

Multiple Choice

The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. For a given single sum invested at 8% for 4 years, how will the future value be affected if the compounding period is changed from annual to quarterly?

• A) The future value will decrease.
• B) The future value will stay the same.
• C) There is not enough information to determine the impact.
• D) The future value will increase.

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Definitions:

Res Ipsa Loquitur

“The thing speaks for itself.”

Transfer of Possession

The act of moving the control or ownership of property from one person to another.

Disclaimer of Liability

A statement that seeks to limit one’s responsibility for any harm or damage that may occur from the use of a service or product.

Bailment

A legal relationship where physical possession of personal property is transferred from one person to another, with the understanding that the property will be returned.