(Advanced Analysis) Ricardo Deposits $1,000 into His Savings Account

question 120

Multiple Choice

(Advanced analysis) Ricardo deposits $1,000 into his savings account. What rate of interest would he have to earn on his savings for his deposit to be worth $2,000 in eight years?

• A) 8.75 percent
• B) 9.1 percent
• C) 10 percent
• D) 10.4 percent

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Definitions:

Home Currency

The domestic currency of a company or country in which it conducts its primary business operations.

NPV

A valuation method that calculates the net value of an investment by discounting future cash flows back to their present value.

Yen

The official currency of Japan, symbolized as ¥, and one of the most traded currencies in the foreign exchange market.

Cash Flows

The net amount of cash and cash-equivalents being transferred into and out of a business, vital for assessing the financial health of an entity.