Under which of the following conditions will a future value calculated with simple interest exceed a future value calculated with compound interest at the same rate?
A. The interest rate is very high.
B. The investment period is very long.
C. The compounding is annually.
D. This is not possible with positive interest rates.
Answer: D. This is not possible with positive interest rates.
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A retail company has goods available for sale of $500,000 at retail and $200,000 at cost and ending inventory of $49,000 at retail. What is the estimated cost of goods sold?
a. $151,000 b. $190,200 c. $180,400 d. $170,600
Marco Insurance acquired shares of Penny Systems' common stock on December 28, 2013, for $400,000 and classified them as trading securities. The fair value of these securities on December 31, 2013, was $402,000 . Marco Insurance sold these shares on January 3, 2014, for $405,000. (Refer to Marco Insurance.) The total income from the purchase and sale of these securities is
a. $5,000 b. $4,000 c. $3,000 d. $2,000 e. $1,000