You Are Investing $\$ 1000$ In a Certificate of Deposit for 2 Years and You

question 84

Multiple Choice

You are investing $\$ 1000$ in a certificate of deposit for 2 years and you want the interest for that time to exceed $\$ 50$ . The interest is compounded annually. What interest rate should you have? Hint: Solve the inequality $1000 ( 1 + r ) ^ { 2 } > 1,050$ . Round your answer to one decimal place.

• A) \(3.8 \%\)
• B) \(3.5 \%\)
• C) \(4.8 \%\)
• D) \(2.5 \%\)
• E) \(1.1 \%\)

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Definitions:

Incremental Cash Flow

The additional cash flow generated by a company from a new project or investment, used for analysis of its viability.

Capital Budgeting Analysis

A process that involves evaluating and comparing the financial impacts of long-term investments to choose the most profitable ones.

Macro-Incremental

This term is not widely recognized as a standard financial or economic term. NO.

Non-Cash Items

Expenses or incomes on a company’s financial statements that do not involve actual cash flow, such as depreciation or amortization.