Today, Courtney wants to invest less than $5,000 with the goal of receiving $5,0

Question

Today, Courtney wants to invest less than $5,000 with the goal of receiving $5,000 back some time in the future. Which one of the following statements is correct?



a. The period of time she has to wait until she reaches her goal is unaffected by the compounding of interest.

b. The lower the rate of interest she earns, the shorter the time she will have to wait to reach her goal.

c. She will have to wait longer if she earns 6 percent compound interest instead of 6 percent simple interest.

d. The length of time she has to wait to reach her goal is directly related to the interest rate she earns.

e. The period of time she has to wait decreases as the amount she invests today increases.

Explanation / Answer

e. The period of time she has to wait decreases as the amount she invests today increases. The formula is PV*(1+r/100)^n=FV let's say r is 5% (it doesn't matter if it is constant) PV*(1+5/100)^n=5000 now clearly the greater the PV is, the less the other part will have to pay. And think about it - which gets more interest, more or less money? Please only rate answers with work. Message/comment if you are confused about any part of this.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.