An Individual Invests $5,000 at a Rate of 5% Per

question 93

Multiple Choice

An individual invests $5,000 at a rate of 5% per annum.What will be its value in 10 years' time?

• A)$7,500
• B)$7,927
• C)$8,144
• D)$9,000
• E)$9,542

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Definitions:

Capital Accounts

Financial records that show the capital contributions, withdrawals, and earnings of owners in a company.

Cost of Capital

The rate of return a company must offer investors to entice them to invest, reflecting the risk of the investment alongside the return.

IRR

An economic indicator, the Internal Rate of Return is utilized to assess the possible profitability of investment opportunities.

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project, calculated by summing the present values of incoming and outgoing cash flows.