CIMA BA1 · Chapter 13 · Question 1 of 10
$8,000 is invested at 5% a year simple interest for 4 years. What will the investment be worth at the end of the period?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $9,600.00
Explanation
Simple interest = 8,000 x 0.05 x 4 = $1,600.00. Value = 8,000 + 1,600 = $9,600.00. With compound interest it would be 8,000 x 1.05^4 = $9,724.05.
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