Determine the Amount of Interest Earned at the End of Year

question 89

Multiple Choice

Determine the amount of interest earned at the end of year 9 based on $3,000 annual payments received in years 1, 3 and 5 given an interest rate of 5.2% compounded annually.

• A) $3,241.20
• B) $3,456.99
• C) $3,688.18
• D) $3,939.72
• E) $4,004.48

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Definitions:

Finished Unit

A product that has completed all stages of production and is ready for sale to consumers.

Cash Disbursements

Payments made in cash by a business during a period of time.

Raw Materials Purchases

The total cost of raw materials bought by a company for production purposes during a specific time frame.

Cash Balance

Represents the amount of cash a company has on hand or in its bank accounts at any given time.