Use the Compound Interest Formula , Where P Is

question 22

Multiple Choice

Use the compound interest formula , where P is the original amount of the investment, i is the interest rate per compounded period, n is the total number of compounding periods, and A is the value of the investment after n periods. To save for post-secondary tuition, a parent invests $8000 in a mutual fund that earns interest at the rate of 5.9% per year compounded monthly.
In approximately how many years will the investment be worth $13,700? Round to the nearest year.

• A) 8 years
• B) 4 years
• C) 14 years
• D) 9 years

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Definitions:

Step-down Method

A cost allocation method used in accounting to distribute overhead costs to various cost objects based on a hierarchical sequence of allocation bases.

Custodial Services

These are services related to the maintenance and cleaning of buildings and facilities.

Square Feet

A unit of area measurement equal to a square measuring one foot on each side.

Step-down Method

An approach in accounting used to allocate indirect costs to relevant cost objects by sequentially distributing service departments' costs to production departments and other service departments.