First Community Bank pays an APR of 6.22% simple interest on its savings account, whereas First...

Question

Question

First Community Bank pays an APR of 6.22% simple interest on its savings account, whereas First...

First Community Bank pays an APR of 6.22% simple interest on its savings account, whereas First Mutual Bank pays an APR of 5.38% compounded semiannually. If you made a deposit of $14,500 in each bank today, which of the bank accounts would be a better investment over a five year investment period ?

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

First Community Bank :

Simple interest=Principal*Interest rate*time period

=14500*6.22%*5=$4509.5

Future value=Simple interest+Principal

=14500+4509.5=$19009.5

First Mutual Bank:

We use the formula:
A=P(1+r/2)^2n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=14500*(1+0.0538/2)^(2*5)

=14500*1.30401185

=$18908.17(Approx)

Hence better investment would be First Community Bank having higher future value.

Add a comment

Answer 2

Similar Homework Help Questions

First City Bank pays 9 percent simple interest on its savings account balances, whereas Second City...

First City Bank pays 9 percent simple interest on its savings account balances, whereas Second City Bank pays 9 percent interest compounded annually. If you made a deposit of $7,500 in each bank, how much more money would you earn from your Second City Bank account at the end of eight years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)diffence in accounts?
First City Bank pays 6 percent simple interest on its savings account balances

First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually.If you made a $ 57,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 10 years? (Do not round intermediate calculations and round your answer 10 2 decimal places, e.g., 32.16.Difference in accounts = $_______
(5 marks) Planters Bank pays 5 percent simple interest on its savings account balances, whereas Centura...

(5 marks) Planters Bank pays 5 percent simple interest on its savings account balances, whereas Centura Bank pays 5 percent compounded annually. If you made a RM12,000 deposit in each bank, how much more money would you earn from your Centura Bank account at the end of 20 years?

Problem 5-1 Simple Interest versus Compound Interest [LO1] First City Bank pays 8 percent simple interest...

Problem 5-1 Simple Interest versus Compound Interest [LO1] First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually. If you made a $68,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 8 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Difference in accounts
First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City...

First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually. If you made a $65,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 8 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Your coin collection contains 45 1952 silver dollars. If your grandparents purchased them...
Check my work View previous attempt First City Bank pays 9 percent simple interest on its...

Check my work View previous attempt First City Bank pays 9 percent simple interest on its savings account balances, whereas Second City Bank pays 9 percent interest compounded annually If you made a deposit of $7,500 in each bank, how much more money would you earn from your Second City Bank account at the end of eight years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Difference in accounts This is a numeric...

First Simple Bank pays 9.7 percent simple interest on its investment accounts. If First Complex Bank...

First Simple Bank pays 9.7 percent simple interest on its investment accounts. If First Complex Bank pays interest on its accounts compounded annually, what rate should the bank set if it wants to match First Simple Bank over an investment horizon of 9 years? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Interest rate %______
First Simple Bank pays 9.3 percent simple interest on its investment accounts. If First Complex Bank...

First Simple Bank pays 9.3 percent simple interest on its investment accounts. If First Complex Bank pays interest on its accounts compounded annually, what rate should the bank set if it wants to match First Simple Bank over an investment horizon of 10 years? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)Interest Rate_______________
i need asnwers for HP calc 1. Simple Interest versus Compound Interest. First City Bank pays...

i need asnwers for HP calc 1. Simple Interest versus Compound Interest. First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually. If you made a deposit of $8,100 in each bank, how much more money would you earn from your Second City Bank account at the end of 10 years? 2. Calculating Future Values. For each of the following, compute the future value: Present Value Years...

Problem 6-29 Simple Interest versus Compound Interest (L04) First Simple Bank pays 8.3 percent simple interest...

Problem 6-29 Simple Interest versus Compound Interest (L04) First Simple Bank pays 8.3 percent simple interest on its investment accounts. If First Complex Bank pays interest on its accounts compounded annually, what rate should the bank set if it wants to match First Simple Bank over an investment horizon of 8 years? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Interest rate 1 %

First Community Bank pays an APR of 6.22% simple interest on its savings account, whereas First...

Homework Answers

Add Answer to:
First Community Bank pays an APR of 6.22% simple interest on its savings account, whereas First...

Post as a guest

Earn Coins

First City Bank pays 9 percent simple interest on its savings account balances, whereas Second City...

First City Bank pays 6 percent simple interest on its savings account balances

(5 marks) Planters Bank pays 5 percent simple interest on its savings account balances, whereas Centura...

Problem 5-1 Simple Interest versus Compound Interest [LO1] First City Bank pays 8 percent simple interest...

First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City...

Check my work View previous attempt First City Bank pays 9 percent simple interest on its...

First Simple Bank pays 9.7 percent simple interest on its investment accounts. If First Complex Bank...

First Simple Bank pays 9.3 percent simple interest on its investment accounts. If First Complex Bank...

i need asnwers for HP calc 1. Simple Interest versus Compound Interest. First City Bank pays...

Problem 6-29 Simple Interest versus Compound Interest (L04) First Simple Bank pays 8.3 percent simple interest...

First Community Bank pays an APR of 6.22% simple interest on its savings account, whereas First...

Homework Answers

Add Answer to: First Community Bank pays an APR of 6.22% simple interest on its savings account, whereas First...

Post as a guest

Earn Coins

Add Answer to:
First Community Bank pays an APR of 6.22% simple interest on its savings account, whereas First...