If an Amount $AAA Today Earns Interest at a Rate $\$ A A A \times n \times i$

question 194

Multiple Choice

If an amount $AAA today earns interest at a rate of i percent per year, then the accumulated amount at the end of n years will be

• A) \(\$ A A A \times n \times i\)
• B) \(\$ A A A \times i ^ { n }\)
• C) \(( \$ A A A ) ^ { n } \times ( 1 + i )\)
• D) \(\$ A A A \times ( 1 + i ) ^ { n }\)

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Definitions:

Interest Rate

The cost paid on borrowed assets or the compensation for the use of borrowed money, usually expressed as a percentage of the total amount borrowed.

Loanable Funds

The sum of money available for borrowing, constituted by savings and investments, often determining interest rates in financial markets.

Equilibrium Interest Rate

The interest rate at which the demand for money balances equals the supply of money, resulting in a stable economic situation without a tendency for the interest rate to change.

Loanable Funds

The money available for borrowing, encompassing both the savings of individuals and institutions and the money created by banks.