The Future Value of $7000 Invested for 5 Years at Rate

question 152

Multiple Choice

The future value of $7000 invested for 5 years at rate r, compounded annually, is given by $S = 7000 ( 1 + r ) ^ { 5 }$ Find the rate r, as a percent, that gives a future value of $9817.86. Round to the nearest whole percent.

• A) 10%
• B) 8%
• C) 6%
• D) 7%

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Definitions:

Post-Employment Benefits

Benefits, other than pensions, that a company provides to its retired employees, such as life insurance and medical plans.

Compensated Absences

Employee benefits that provide pay for holidays, sick leave, and other forms of absence from service that are compensated by the employer.

AASB 119

The Australian Accounting Standards Board standard which outlines the accounting requirements for employee benefits, including wages, salaries, and pension plans.

Defined Benefit Post-Employment Fund

A pension plan where the benefits that an employee will receive upon retirement are defined in advance.