The Initial Investment in a Savings Account in Which Interest

question 9

Multiple Choice

The initial investment in a savings account in which interest is compounded continuously is $803. If the time required to double the amount is years, what is the annual rate? Round your answer to two decimal places. ​

• A) 7.30 %
• B) 7.70 %
• C) 13.71 %
• D) 6.10 %
• E) 8.70 % ​

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.

Lease Payments

Periodic payments made by a lessee to a lessor for the use of an asset over a specified lease term.

Net Present Value

A financial metric used to evaluate the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows.

Capital Budgeting

The process of planning and managing a firm’s investment in long-term assets.