If You Have a Choice to Earn Simple Interest on $10,000

question 82

Multiple Choice

If you have a choice to earn simple interest on $10,000 for three years at 8% or annually compounded interest at 7.5% for three years which one will pay more and by how much?

• A)Simple interest by $50.00
• B)Compound interest by $22.97
• C)Compound interest by $150.75
• D)Compound interest by $150.00
• E)None of the above.

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Definitions:

Bonds

Securities that provide a fixed return, symbolizing a lending agreement between an investor and a borrower, usually involving corporations or government entities.

Retire

In finance and accounting, this term typically refers to the process of paying off or settling a debt or obligation, such as bonds or mortgages.

Financial Activities

Transactions related to managing the company's finances, including raising capital, repaying investors, and dividends distribution.

Operating Activities

Day-to-day actions that are involved in running a business and generating income, including producing and selling goods or providing services.