How Much Interest Will Be Earned in the Next Year

question 106

Multiple Choice

How much interest will be earned in the next year on an investment paying 12% compounded annually if $100 was just credited to the account for interest?

• A) $88
• B) $100
• C) $112
• D) $200

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Definitions:

Shareholders' Equity

The portion of the company's assets that belongs to the shareholders after all liabilities have been subtracted.

Dividends in Arrears

Unpaid dividends of cumulative preferred stock for the designated period.

Accumulated Other Comprehensive Income

A component of shareholders' equity that includes unrealized gains and losses on certain types of investments, not recognized in the income statement.