Travis Invested $8,000 in an Account That Pays 4 Percent

question 14

Multiple Choice

Travis invested $8,000 in an account that pays 4 percent simple interest. How much more could he have earned over a 7-year period if the interest had compounded annually?

• A) $291.41
• B) $287.45 
• C) $302.16
• D) $266.67
• E) $258.09

---

Definitions:

ROE

ROE, or Return on Equity, measures a corporation’s profitability by revealing how much profit it generates with the money shareholders have invested.

Investments

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Compound Leverage Factor

A metric used to evaluate the effectiveness of using borrowed funds or financial derivatives to increase investment returns.

Debt Percentage

The proportion of a company's total liabilities to its total assets, indicating the degree of leverage used by the company.