If You Put $400 into a Bank Account Today and It

question 32

Multiple Choice

If you put $400 into a bank account today and it promises to pay 5% interest for 6 years,how much is in the account at the end of the six years?

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Definitions:

Straight-Line Method

A method of depreciation where an asset's cost is evenly reduced over its useful life.

Market Interest Rate

Market Interest Rate refers to the prevailing rate at which interest is paid by borrowers for loans or earned by investors in the market.

Stated Interest Rate

The annual interest rate declared on a financial instrument, such as a loan or bond, not adjusting for compounding or market conditions.

Capital Lease

A leasing arrangement in which the lessee assumes some risks and benefits of ownership of the asset being leased.