Suppose You Deposit $1,000 in an Account with an Annual

question 156

Multiple Choice

Suppose you deposit $1,000 in an account with an annual interest rate of 9% compounded quarterly. How many years will it take for the account to contain $3,000?

• A) 3.19 years
• B) 12.75 years
• C) 49.37 years
• D) 14.87 years
• E) 12.34 years

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Definitions:

Cost of Equity

The cost of equity represents the return that investors expect from an investment in a company, essentially the amount of profit a company must generate to compensate its equity investors.

Growth Rate

The growth rate is a measure of the increase in a specific variable over time, commonly used to gauge the expansion of a company's revenue, profits, or population.

Cost of Equity

The return a company must offer investors to compensate for the risk of investing in its equity, often estimated using models like the CAPM.

Growth Rate

The measure of an increase in a specific variable, such as revenue, within a particular period, often expressed as a percentage.