Statement TrueFalse OO The process of earning simple interest does not allow a depositor or...
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Accounting
Statement TrueFalse OO The process of earning simple interest does not allow a depositor or investor to earn interest on any previously earned interest. Everything else held constant, an account that earns compound interest will grow more quickly than an otherwise identical account that earns simple interest. After the end of the second year and all other factors remaining equal, a future value based on compound interest will exceed a future value based on simple interest. O Sarah is willing to invest $30,000 for eight years, and is an economically rational investor. She has identified three investment alternatives (L, M, and P) that vary in their method of calculating interest and in the annual interest rate offered. Since she can only make one investment during the eight-year investment period, complete the following table and indicate whether Sarah should invest in each of the investments. Note: When calculating each investment's future value, assume that all interest is earned annually. The final value should be rounded to the nearest whole dollar. Make this investment? Investment Interest Rate and Method Expected Future Valu YesNo 5% compound interest 4% simple interest 7% compound interest
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