Compounding: Joachim Noah Is Investing $5,000 in an Account Paying

question 60

Multiple Choice

Compounding: Joachim Noah is investing $5,000 in an account paying 6.75 percent annually for three years. What is the interest-on-interest if interest is compounded?

• A) $1,012.50
• B) $1,082.38
• C) $82.38
• D) $69.88

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Definitions:

Wharfage

A fee charged for the use of a wharf for loading or unloading cargo, or for the temporary storage of goods on the wharf area.

Sell-Off

Transaction in which assets are sold by one firm to another.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Discount Size

Pertains to the magnitude or amount of reduction in price offered on goods or services, often used as a sales promotion technique to increase consumer demand or clear inventory.