Question

10. 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. B. C. D. The period of time she has to wait until she reaches her goal is unaffected by the compounding of interest. She will have to wait longer if she earns 6 percent compound interest instead of 6 percent simple interest. The period of time she has to wait decreases as the amount she invests today increases. The lower the rate of interest she earns, the shorter the time she will have to wait to reach her goal.

Answer 1

ANSWER:

Given that:

The following statement of the time period is

C) 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*(+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 intrest, more or less money?

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