Suppose that a young investor is considering investing $100 in an interest bearing account that pays 10% interest compounded annually. The investor's plan is to leave the money in the account for one year and then
Withdraw the principal plus all accrued interest. If the investor's MARR is known to be 10%, does the investor:

Question

Quizplus · Accepted Answer

The investor breaks even on the investment because the interest rate of the account (10%) matches the investor's Minimum Acceptable Rate of Return (MARR), also 10%. This means the investor earns exactly what they consider the minimum acceptable return, neither gaining additional wealth beyond their expectation nor losing money.

Suppose That a Young Investor Is Considering Investing $100 in an Interest