bcor 340 exam 1 Q&A 2023

future value - Answer- Marcos is investing $5 today and 7% interest so he can have $35 later. This $35 is referred to as the compounding - Answer- Tomas earned $89 in interest on his saving account last year and has decided to leave the $86 in his account this coming year so it will earn interest. This process of earning interest on prior interest earnings is called The period of time she has to wait decreases as the amount she invests increases - Answer- Today, charity wants to invest less than $3,000 with the goal of receiving $3000 back some time in the future. Which is correct? interest on interest - Answer- Jamie earned $14 in interest on her savings account last year. she has decided to leave the $14 in her account so that she can earn on last year's interest earnings is called. compound interest - Answer- Lester had $6,270 in his savings account at the beginning of this year. This amount includes both the $6,000 he originally invested at the beginning of last year plus the $270 he earned in interest last year. This year, Lester earned a total of $282.15 in interest even though the interest rate on the account remained constant. This $282.15 is best described as: discount rate - Answer- The interest rate used to compute the present value of a future cash flow is called the: Increasing the interest rate - Answer- Kendall in investing $3,333 today 3% annual interest for 3 years. What will increase the future value of that amount? 6.5 percent simple interest - Answer- Jenny needs to borrow $5,500 for four year. The loan will be repaid in one lump sum at the end of the loan term. What interest rate is best for jenny? PV=$600 / (1+.05)^6 - Answer- which is the correct formula for the current value $600 invested today at 5% interest for 6 years remain constant, regardless of the investment time period - Answer- given an interest rate of 0%, the future value of a lump sum invested today will always: The future value is directly related to the interest rate - Answer- What is a correct stateme