Shawn Has $2,500 Invested at a Guaranteed Rate of 4

question 53

Multiple Choice

Shawn has $2,500 invested at a guaranteed rate of 4.35 percent,compounded annually.What will his investment be worth after five years?

• A)$2,997.04
• B)$3,288.00
• C)$3,321.32
• D)$3,093.16
• E)$2,857.59

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Definitions:

Effective Annual Rate

The real return on an investment after accounting for compounding interest over a year, often differing from the stated nominal rate.

Compounded Monthly

Interest calculation method where interest earned is added to the principal balance each month, affecting future interest calculations.

Rate of Return

The net profit or net loss recorded on an investment within a certain interval, articulated as a percentage of the investment's initial pricing.

Cash Flows

Cash flows describe the total net cash and equivalents moving into and exiting a company.