At an Interest Rate of 14%, Approximately How Much Would

question 401

Multiple Choice

At an interest rate of 14%, approximately how much would you need to invest today if you wanted to have $2,000,000 in 10 years? (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. (Round your intermediate calculations to 3 decimal places.)

• A) $383,436
• B) $540,000
• C) $740,741
• D) $1,043,200

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Definitions:

Annual Sales

The total revenue generated from sales activities over the course of one year.

Compounded Semiannually

A method where interest payments are made on an investment or loan twice each year, leading to interest being earned on previously earned interest.

Annually Compounded

Pertaining to interest on investment or loans that is calculated once a year, adding to the sum each year.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, often used as an indicator of inflation.