(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:

Opportunity Cost

The act of sacrificing possible gains from alternative decisions when one is made.

Freight Train

A freight train is a train composed of freight cars for the purpose of transporting goods and materials rather than passengers.

Sugar

A sweet substance primarily obtained from sugarcane and sugar beets, used as a sweetener in food and drinks.

Opportunity Cost

The charge of bypassing the following best possibility when making a selection.