Question: The primary difference between simple and compound interest is that: a.Simple interest is only paid at the end of the investment period. b.Compound interest entails

  1. The primary difference between simple and compound interest is that:

a.Simple interest is only paid at the end of the investment period.

b.Compound interest entails receiving interest payments on previously earned interest.

c.Compound interest is paid up front and not when the investment matures.

  1. You are given the option of receiving a lump sum of $20,000 now or an annuity of $2000 per year for 10 years. Which of the following is correct?.

a.You cannot choose between the two without computing present values.

b.You cannot choose between the two without computing future values.

c.The lump sum is preferable for any positive interest rate.

d.The annuity is preferable for any positive interest rate.

d.Simple interest is not taxed by the federal government.

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