1) Solution:
1 IJA bank currently charges 10% interest compounded annually on business loans. If the bank were...
Question 11 (1 point) First National Bank charges 4.4% compounded daily on its business loans. First United Bank charges 4.4% compounding quarterly. As a potential borrower, which bank would you go to for a loan and why? a) First United Bank because you want to pay more interest on your loan. Ob) First National Bank because you want to pay less interest on your loan. Oc) First United Bank because you want to pay less interest on your loan. d)...
Universal Bank pays 6% Interest, compounded annually, on time deposits. Regional Bank pays 5% interest, compounded quarterly a. Based on effective interest rates, in which bank would you prefer to deposit your money? 1. You would choose Regional Bank because its EAR (or EFF%) is higher. II. You would choose Regional Bank because its nominal interest rate is higher. TIL. You are indifferent between the banks and your decision will be based upon which one offers you a int for...
Effective versus nominal interest rates Bank A pays 9.5% interest compounded annually on deposits, while Bank B pays 9% compounded daily. a. Based on the EAR (or EFF%), which bank should you use? I. You would choose Bank A because its EAR is higher. 11. You would choose Bank B because its EAR is higher. III. You would choose Bank A because its nominal interest rate is higher IV. You would choose Bank B because its nominal interest rate is...
1. First National Bank charges 11.11 % compounded monthly on its business loans. First United Bank charges 11.81%, compounded semiannually. Calculate the EAR for First United Bank. 2. One of your customers is delinquent on his accounts payable balance. You’ve mutually agreed to a repayment schedule of $559 per month. You will charge 1.29 % per month interest on the overdue balance. If the current balance is $13709, how many years will it take for the account to be paid...
Bank ABC offers a 10-year CD that pays a 5% interest compounded annually. Bank XYZ also offers a 10-year CD that pays 4.879% interest compounded daily. How much would a $1,000 initial investment in each bank's CD be worth at maturity?
The bank offers interest rate of 5.26%, compounded semi-annually. If you put $10 in the bank now, how much money do you have at the end of one year? (Round to the nearest cent.)
1. My credit card charges interest of 0.04% per day compounded daily. (a) What is the APR for this credit card? (b) What is the APY? Assume 360 days in a year (twelve 30-day months). 2. A local credit union is advertising a car loan with an APR of 6.75%. If interest is compounded monthly, (a) what is the interest rate per compounding period, and (b) what is the effective annual interest rate (i.e., the APY)? 3. Your local credit...
1. Interest Periods and Compounding a) Your family loans you money for school at a simple interest rate of 5%. If the original amount they provided was $20,000 what will you be paying them back in 5 years? b) You have 10 acres of land that can be used for residential development. It is worth $20,000 per acre right now. What would it be worth in 6 years if it appreciates at a rate of 6% compounded annually? c) Which...
1) You spend $3000 and in return receive three payments of $2400 - at the end of 2nd, 4th, and 6h year. What is the PW of this investment? (interest rate is 10%yr, compounded semi-annually) a) 1935 b) 1830 c)2090 d)1783 1) You spend $3000 and in return receive three payments of $2400 - at the end of 2nd, 4th, and 6h year. What is the PW of this investment? (interest rate is 10%yr, compounded semi-annually) a) 1935 b) 1830...
4) interest questions: (10 pts total) How much will be in your bank account at the end of five years if you invest $5,000 now at 12% per annum, compounded annually? (1 pts) And what if the interest rate is 12% per annum, but compounded monthly? (1 pts) If you invest your $5,000 and want to have $10,000 in five years' time, what is the minimum yearly interest rate that will ensure that you have at least this much when...