Question: 19. Tim needs to borrow $5,000 for two years. The loan will be repaid in one lump sum at the end of the loan term.

19. Tim needs to borrow $5,000 for two years. The loan will be repaid in one lump sum at the end of the loan term. Which one of the following interest rates is best for Tim? a. 7.5 percent simple interest b. 7.5 percent interest, compounded monthly c. 8.0 percent simple interest d. 8.0 percent interest, compounded annually e. 8.0 percent interest, compounded monthly 20. Which of the following will increase the total amount of interest earned on an investment? Assume all interest is reinvested I. increasing the frequency of the interest payments Il. decreasing the frequency of the interest payments III. increasing the interest rate IV. decreasing the interest rate a. IlI only b. I and III only c. 1 and IV only d. II and III only e. Il and IV only Page 4 of 8

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