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2. John deposited $3,000 at the Busey bank in a 24-month CD (Certificate of Deposits) in...
A certificate of deposit (CD) is similar to a savings account, but deposits are generally held...
A certificate of deposit (CD) is similar to a savings account, but deposits are generally held to maturity. They usually offer higher rates than savings accounts because they "tie up" money for a period of time and often require a minimum deposit. A 4-year CD at a certain bank has a nominal rate of 2.379%, and an effective annual yield of 2.400%. If $800,000 is deposited with this bank, how much will be in the account at the end of...
Is an avid reader and buys only mystery novels. Janet deposits $3,000 in a bank account...
Is an avid reader and buys only mystery novels. Janet deposits $3,000 in a bank account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed-that is, it won't change over time. At the time or her deposit, a mystery Initially, the purchasing power of Janet's $3,000 deposit smystery novels For each of the annual inflation rates given in the following table, first determine the new price of a mystery novel, assuming it rises at...
4. You just deposited $3,500 into a bank account and the current real interest rate is...
4. You just deposited $3,500 into a bank account and the current real interest rate is at r = 2% and inflation is expected to be te = 3% over the next year. (a) What nominal interest rate, i, from the bank would you require? (b) How much money will you have at the end of one year? (c) How much money will you have at the end of two years? (d) If you are saving up to buy a...
Self-Study Problem 5.01 John Johnson is planning to invest $29,000 in a bank certificate of deposit...
Self-Study Problem 5.01 John Johnson is planning to invest $29,000 in a bank certificate of deposit (CD) for five years. The CD will pay interest of 8 percent. What is the future value of John's investment? (Round answer to 2 decimal places, e.g. 52.75.) Future value $
Your grandmother asks for your help in choosing a certificate of deposit (CD) from a bank...
Your grandmother asks for your help in choosing a certificate of deposit (CD) from a bank with a one-year maturity and a fixed interest rate. The first certificate of deposit, CD #1, pays 5.95 percent APR compounded quarterly, while the second certificate of deposit, CD #2, pays 6.00 percent APR compounded annually. What is the effective annual rate (the EAR) of each CD, and which CD do you recommend to your grandmother? If the first certificate of deposit, CD #1,...
You agree to make 24 deposits of $500 at the beginning of each month into a...
You agree to make 24 deposits of $500 at the beginning of each month into a bank account. At the end of the 24th month, you will have $13,000 in your account. If the bank compounds interest monthly, what nominal annual interest rate will you be earning, that is what is the APR? (If you are using excel the type is: 1)
You agree to make 24 deposits of $500 at the beginning of each month into a...
You agree to make 24 deposits of $500 at the beginning of each month into a bank account. At the end of the 24th month, you will have $13,000 in your account. If the bank compounds interest monthly, what nominal annual interest rate will you be earning? a. 7.62% b. 8.00% c. 8.40% d. 8.82% e. 9.26%
Your grandmother asks for your help in choosing a certificate of deposit (CD) from a bank...
Your grandmother asks for your help in choosing a certificate of deposit (CD) from a bank with a one-year maturity and a fixed interest rate. The first certificate of deposit, CD #1, pays 5.95 percent APR compounded quarterly, while the second certificate of deposit, CD #2, pays 6.00 percent APR compounded weekly. ****What is the effective annual rate (the EAR) of each CD, If the first certificate of deposit, CD #1, pays 5.95 percent APR compounded , the EAR for...
You agree to make 24 deposits of $500 at the beginning of each month into a...
You agree to make 24 deposits of $500 at the beginning of each month into a bank account. At the end of the 24th month, you will have $13,000 in your account. If the bank compounds interest monthly, what nominal annual interest rate will you be earning? a) Use the formula and explain all your work. b) Use the financial calculator and explain what number you used to get final answer.
1. Allen Paige is planning to invest $10,000 in a bank certificate of deposit (CD) for...
1. Allen Paige is planning to invest $10,000 in a bank certificate of deposit (CD) for five years. The CD will pay interest of 9 percent compounded annually. What is the future value of Allen’s investment? How much would that investment be if Allen received simple interest only instead of compounded interest? 2. Mary Grace expects to need $50,000 for a down payment on a house in six years. How much would she have to invest today in an account...
A certificate of deposit (CD) is similar to a savings account, but deposits are generally held to maturity. They usually offer higher rates than savings accounts because they "tie up" money for a period of time and often require a minimum deposit. A 4-year CD at a certain bank has a nominal rate of 2.379%, and an effective annual yield of 2.400%. If $800,000 is deposited with this bank, how much will be in the account at the end of...
Is an avid reader and buys only mystery novels. Janet deposits $3,000 in a bank account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed-that is, it won't change over time. At the time or her deposit, a mystery Initially, the purchasing power of Janet's $3,000 deposit smystery novels For each of the annual inflation rates given in the following table, first determine the new price of a mystery novel, assuming it rises at...
4. You just deposited $3,500 into a bank account and the current real interest rate is at r = 2% and inflation is expected to be te = 3% over the next year. (a) What nominal interest rate, i, from the bank would you require? (b) How much money will you have at the end of one year? (c) How much money will you have at the end of two years? (d) If you are saving up to buy a...
Self-Study Problem 5.01 John Johnson is planning to invest $29,000 in a bank certificate of deposit (CD) for five years. The CD will pay interest of 8 percent. What is the future value of John's investment? (Round answer to 2 decimal places, e.g. 52.75.) Future value $
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