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Potvin Potvin
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7 years ago
You deposit $100 in a bank for a fixed 7 year term. Interest on the deposit is calculated every half-year (m = 2) at the rate of 5% per half-year (i/m = 5%). Because the term is fixed, you are not allowed to withdraw interest at any point. You earn interest in the final compounding period of the term. How much of that interest is earned off of earlier interest (as opposed to earned off of the principal)?
A) $4.43
B) $9.43
C) $4.90
D) $5.00
E) $9.90
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Corporate Finance Online

Corporate Finance Online


Edition: 1st
Authors:
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BlimpBlimp
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7 years ago
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Pol. Sci. Major
Minoring in Business
Columbia University Sophomore

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Potvin Author
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#2
7 years ago
I posted without any expectations, this surpassed my expectations
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