Consider the following two interest options for an investment of $2000: (A) 6% simple interest. (B) 5% interest compounded annually. After how many years will option B outperform option A.The time it will take for option B to outperform option A is years.

Step 1: Calculate the future value of the investment for option A (simple interest).Future value of…

Answered: Consider the following two interest…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consider the following two interest options for an investment of $2000: (A) 6% simple interest. (B) 5% interest compounded annually. After how many years will option B outperform option A. The time it will take for option B to outperform option A is years.