When Money Is Invested at an Interest Rate of 4 $A = P ( 1.04 ) ^ { t }$

question 25

Multiple Choice

When money is invested at an interest rate of 4%, the value of the investment after t years is given by $A = P ( 1.04 ) ^ { t }$ where P is the original investment. If $24,000 is invested, how long would it take to reach a value of $36,000? Round to the nearest tenth of a year.

• A) 5.7 years
• B) 2.3 years
• C) 10.3 years
• D) 21 years

---

Definitions:

Fixed Asset Turnover Ratio

A financial metric that measures how efficiently a company uses its fixed assets to generate sales, calculated by dividing net sales by average fixed assets.

Capital Intensity Ratio

This ratio measures a company's investment in physical assets relative to its labor costs, indicating how much capital is used in the production process.

External Financing Needed

The amount of funding that a company must seek from external sources to finance its planned activities or investments, beyond what it can generate internally.

Capital Intensity Ratio

A measure of how much capital is used in relation to labor in the production process of a company.