Assume the Following Future Values Will Be Received at the End

question 69

Multiple Choice

Assume the following future values will be received at the end of each year.What is the interest rate if the future value of these amounts at the end of year 3 is equal to $2,393? Yr.1 = $500; Yr.2 = $750; Yr.3 = $1,000

• A)6.5%
• B)6.8%
• C)7.0%
• D)8.0%
• E)8.9%

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Definitions:

Marginal Tax Rates

The tax rate applied to the last unit of currency earned, important for understanding the tax implications of earning additional income.

Capital Gains

The profit realized from the sale of a capital asset, like stocks or real estate, when the sale price exceeds the purchase price.

Interest Income

Earnings received from deposit or investment accounts, such as savings accounts, bonds, or loans.