Time Value of Money / Effective Rate of Interest
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Mr. Jones borrows $2,000 for 90 and pays $35 interest. What is his effective rate of interest?
a. 9.3% b. 7% c. 11.7% d. None of these
If you invest $8,000 at 12% interest, ho much will you have in 7 years?
a. $18,016 b. $17.688 c. $3,616 d. $80,712
How much must you invest at 10% interest in order to see you investment grow to $5,000 in 5 years?
a. $3,070 b. $3,415 c. $3,105 d. None of these
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Solution Summary
The solution explains three questions relating to Time Value of Money and Effective Rate of Interest
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1. The rate of interest = 35/2,000 X 360/90 = 7%
2. Use the ...
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