(a) A customer, David Broke, of First National Bank (FNB) deposits $10,000 with FNB for 5...
(a) A customer, David Broke, of First National Bank (FNB) deposits $10,000 with FNB for 5 years. What is the annualized interest rate that the bank must pay if David Broke’s deposit grows to $12,166.53 at the end of the five-year term? (b) Suppose the bank decides to pay 1.5% interest twice a year, what will be the future value amount that David Broke should receive?
Homework Answers
(a)
What is the annualized interest rate
=(12166.53/10000)^(1/5)-1
=4.00%
(b)
what will be the future value amount that David Broke should receive
=10000*(1+1.5%)^(5*2)
=11605.41
the above is answer..
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