For a Fixed Rate and Principal, the Interest Earned in a Bank

question 12

Multiple Choice

For a fixed rate and principal, the interest earned in a bank account paying simple interest varies directly with the length of time the principal is left on deposit. If an investment of $7,000 earns $700 in 2 years, how much will it earn in 8 years?

• A) $2,700
• B) $2,850
• C) $2,750
• D) $2,900
• E) $2,800

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance premiums.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor.

Theory of Constraints

A management approach that focuses on identifying and managing the most limiting factor (constraint) that stands in the way of achieving a goal.

Goldratt and Cox

Eliyahu M. Goldratt and Jeff Cox, co-authors of "The Goal," a book introducing the Theory of Constraints, a methodology for improving organizational performance.