(Advanced Analysis) Alex Wants to Have $800 Saved Up at the End

question 109

Multiple Choice

(Advanced analysis) Alex wants to have $800 saved up at the end of 10 years. If he deposits $500 today, what annually compounded rate of interest would he have to earn to reach his goal?

• A) 4.8 percent
• B) 5.2 percent
• C) 5.7 percent
• D) 6.2 percent

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Definitions:

Break-Even

The point at which total costs and total revenue are equal, meaning there is no net loss or gain, and the business or investment is self-sustaining.

Maximize Profits

A strategy or goal where a firm or individual seeks to achieve the highest possible profit from its operations.

Peak Efficiency

The state of operation in which a system or process achieves its maximum output with the lowest input, often ideal in terms of productivity.

Perfectly Competitive Firm

A company that operates in a market where there are many sellers and buyers, the product is homogeneous, and there is free entry and exit from the market.