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TEST BANK Appendix A Compound Interest and the Time-Value of Money
4.4
Appendix A Compound Interest and the Time-Value of Money
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Topic: Compound interest
1. When interest is earned on interest in a savings account in a bank, this is called compound interest.
Answer: True
Rationale: As interest accumulates on an investment, both the original investment and the
accumulated interest will earn a return in subsequent periods.
Topic: Time value of money
2. A dollar received today is worth more than a dollar received two years ago.
Answer: False
Rationale: It is much better to receive money as soon as possible as it can be invested and will earn
additional interest


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Author ExamPro
Published 18 Mar 2024
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TEST BANK Appendix A Compound Interest and the Time-Value of Money
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