Multiple Compounding Periods (FV): Normandy Textiles Had a Cash Inflow

question 30

Multiple Choice

Multiple compounding periods (FV) : Normandy Textiles had a cash inflow of $1 million, which it needs for a long-term investment at the end of one year. It plans to invest this money in a bank term deposit that pays daily interest at 3.75 percent. What will be the value of the investment at the end of the year? (Round to the nearest dollar.)

• A) $1,211,375
• B) $1,000,103
• C) $1,037,500
• D) $1,038,210

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Definitions:

Fixed Costs

Fixed overheads that are unaffected by changes in production or sales volume, like rental costs, payroll, and insurance charges.

Strategic Option

Refers to choices available to a company or an investor that could affect key business or investment strategies beneficially.

Soft Rationing

The situation where a company limits the amount of financial resources available for certain projects based on internal policy decisions.

Hard Rationing

A severe form of capital rationing where external factors such as market conditions or regulatory constraints limit the availability of funding.