Calculate the Effective Rate of Interest, If $10 000 Grew

question 73

Multiple Choice

Calculate the effective rate of interest, if $10 000 grew to $15 000 in 4 years with quarterly compounding.

• A) 12.28%
• B) 10.67%
• C) 4.06%
• D) 8.45%
• E) 0.85%

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Definitions:

Amortization

The process of reducing the cost of a tangible or intangible asset through systematic, periodic deductions over its useful life.

Fair Value

An estimate of the price at which an asset or liability could be traded in an orderly transaction between market participants at the measurement date.

Unrealized Profits

Gains that have been achieved on paper from an investment but have not yet been realized through a sale or transaction.

Intercompany Sales

Transactions of goods or services between subsidiaries within the same corporate group, not affecting consolidated revenue.