Question

9. The concept of compound interest refers to: a. earning interest on the original investment b. payment of interest on previously earned interest. c. investing for a multi-year period of time. d. determining the APR of the investment. 10. Suppose that you can subscribe to a magazine using either a one-year rate of $27, a two-year rate of $52, a three-year rate of $65, or a four-year rate of $100. If want to receive this magazine for four years and if your opportunity cost of funds is 8%, which rate offers the lowest cost? a. A four-year subscription costing $100 and paid immediately. b. Four one-year subscriptions, of $27 each, paid at the beginning of each year. c. A two-year subscription paid immediately, costing S52, followed by another two-year subscription costing $52 and paid at the beginning of the third year. d. A one-year subscription paid immediately, costing $27, followed by a three-year subscription costing $65 and paid at the beginning of the second year. e. There is not enough information provided to answer this question. Part II: PROBLEMS Compute a final numerical answer for each of the following problems. You should work out your solutions on loose leaf paper, however, I may or may not collect your worked out solutions. To be safe, however, I suggest that you write out a solution for every problem and be ready to turn it in if asked. Round all dollar answers to 2 decimal places, round time (years or months) answers to one (1) decimal place and record interest rates as percent values rounded to one (1) decimal place. However, be sure to NOT input a dollar sign, commas, or percent sign on D2L. For example, record $3,284.33965 as 3284.34, record 37.285432 years as 37.3 and record.064358 -6.4358% as 6.4. 11. As of July 1, 2018, the total population of the United States was 329,256,465. If the U.S. population grows by 2.1% annually over the next 25 years, what will the U.S. population be on July 1, 2043 (rounded to the nearest whole number)? 12. According to www.numbeo.com, the current price of a MeMeal at MeDonalds (or Equivalent Combo Meal) in the U.S.is $7.00. Ir the average annual inflation rate over the past 30 years was 2.57% p... what did a McMeal at McDonalds cost 20 years ago? 13. What is the future value on the day of the last deposit of 35 annual deposits of $750 per year (first deposit to be made today) given an interest rate of 5.5% p.a.?

Answer 1

Solution :- 9

The Correct Answer is ( B ) that is Paying of interest on previously earned interest

The Concept of compound interest refers to Paying of interest on previously earned interest . Means in the compounded interest a lender has to pay interest not only on the original investment even also on the due interest

Such as A give B 1000 rupees @ 10% per annum

Now First Year the interest charged by A on B = 1000 * 10% = 100

Now Next Year the interest Charged by A on B = ( $1000 + $100 ) * 10% = $110

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