You Just Won $25,000 and Deposited Your Winnings into an Account

question 18

Multiple Choice

You just won $25,000 and deposited your winnings into an account that pays 6.2 percent interest, compounded annually. How long will you have to wait until your winnings are worth $50,000?

• A) 11.52 years
• B) 12.00 years
• C) 12.29 years
• D) 12.67 years
• E) 12.90 years

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Definitions:

Tax Rate

The tax rate imposed by governmental authorities on the income of persons or businesses.

Coupon

The interest payment made to the bondholder during the life of the bond, expressed as a percentage of the bond's face value.

Pre-tax Cost

The cost of an investment or transaction before any taxes are considered or applied.

Coupon

Yearly interest rate provided by a bond, shown as a percentage of its face value.