The Future Value of $4000 Invested for 5 Years at Rate

question 259

Multiple Choice

The future value of $4000 invested for 5 years at rate r, compounded annually, is given by S =4000(1=r) ⁵. Find the rate r, as a percent, that gives a future value from $5610 to $6442, inclusive. Round to the nearest whole percent.

• A) \(7 \% \leq \mathrm { r } \leq 10 \%\)
• B) \(7 \% \leq \mathrm { r } \leq 15 \%\)
• C) \(8 \% \leq \mathrm { r } \leq 13 \%\)
• D) \(6 \% \leq \mathrm { r } \leq 9 \%\)

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Definitions:

Partial Equity Method

An accounting technique used for investments, where the investment is recorded at cost and adjusted for the investor's share of the investee's income, losses, and dividends.

Excess Consideration

The amount paid over the fair value of net assets during an acquisition, often recorded as goodwill on the balance sheet.

Equipment Undervalued

A situation in which the book value of equipment is recorded at less than its fair market value.

Partial Equity Method

A method of accounting for investments where the investor recognizes its share of the profits and losses of the investee, to the extent of its initial investment, in its financial statements.