The I.C. James Co. invested $10,000 six years ago at 5% simple interest. The I.M. Smart Co. invested $10,000 six years ago at 5% interest which is compounded annually. The I.C. James Co. will have an account value of $13,400.96 six years from now.

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Rodrigo Quezada · Accepted Answer

Final Answer : False, Explanation :  The I.C. James Co., with a simple interest rate of 5%, would have an account value of $13,000 after six years, calculated as $10,000 principal + ($10,000 * 0.05 * 6) in interest. The account value of $13,400.96 specifically pertains to the I.M. Smart Co.'s investment, which grows due to compound interest.

The I.C. James Co. invested $10,000 six years ago at 5% simple interest. The I.M. Smart Co. invested $10,000 six years ago at 5% interest which is compounded annually. The I.C. James Co. will have an account value of $13,400.96 six years from now.

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