What Would Be the Future Value of a Loan of $1,000

question 75

Multiple Choice

What would be the future value of a loan of $1,000 for two years if the bank offered a 10% interest rate compounded semiannually?

• A)$1,720
• B)$1,960
• C)$1,200
• D)$1,216

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Definitions:

Flotation Costs

Expenses incurred by a company in issuing new securities, including legal, administrative, and underwriting fees.

Constant Rate

A fixed percentage or value that does not change over a specified period of time, often used in financial formulas to calculate growth or decay.

Retained Earnings

The portion of net income not distributed to shareholders but instead reinvested in the business or used to pay off debt.

Common Equity

Represents the stockholders' equity or the amount available to common shareholders as a portion of the net worth of a company.