MyLab Test April. Start $2022/23$

Question $2$ of $50$

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This quest

Calculate the future value of $$5,000$ in

a$.5$ years at an interest rate of $8\%$ per year.

b$.10$ years at an interest rate of $8\%$ per year.

c$.5$ years at an interest rate of $16\%$ per year.

d$.$ Why is the amount of interest earned in part $($a$)$ less than half the amount of interest earned in part $($b$)?$

a$.$ Calculate the future value of $$5,000$ in $5$ years at an interest rate of $8\%$ per year.

The future value of $$5,000$ in $5$ years at an interest rate of $8\%$ per year is $ $($Round to the nearest cent$).$

b$.$ Calculate the future value of $$5,000$ in $10$ years at an interest rate of $8\%$ per year.

The future value of $$5,000$ in $10$ years at an interest rate of $8\%$ per year is $ $($Round to the nearest cent.$)$

c$.$ Calculate the future value of $$5,000$ in $5$ years at an interest rate of $16\%$ per year.

The future value of $$5,000$ in $5$ years at an interest rate of $16\%$ per year is $ $($Round to the nearest cent.$)$

d$.$ Why is the amount of interest earned in part $($a$)$ less than half the amount of interest earned in part $($b$)?($Select the best choice below.$)$

A$.$ The interest earned in part $($a$)$ is based on a lower effective annual interest rate.

B$.$ The annual interest rate in part $($b$)$ is slightly higher than the rate assumed in part $($a$).$ This is because of compounding.

C$.$ This results because you earn more interest on past interest. As interest is earned on the increasing amount of accumulated interest, the money grows faster as time goes on$.$

D$.$ The amount of interest earned in part $($a$)$ is really half of the amount of interest earned in part $($b$)$ since in part $($b$)$ the money grows for twice as many years as in part $($a$).$