Question

Solve the following word problem by using Table 11-1.

The First National Bank is offering a 5-year certificate of deposit (CD) at 4% interest compounded quarterly; Second National Bank is offering a 5-year CD at 5% interest compounded annually. Round percentage answers to two decimal places. Round dollars to the nearest cent. Do not round intermediate calculations.

Click here for Table 11-1

a. If you were interested in investing $6,000 in one of these CDs, calculate the compound amount of each offer.

First National: $

Second National: $

b. What is the annual percentage yield of each CD?

Do not enter the percent symbol in your answer.

First National:  %

Second National:  %

c. If Third National Bank has a 5-year CD at 4.5% interest compounded monthly, use the compound interest formula to calculate the compound amount of this offer.

$

Answer 1

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PV, FV, ANNUITY (Autosaved) - Microsoft Excel (Product Activation Failed) Review View Add-Ins File Home Insert Page Layout Formulas Data - 2x % Cut AutoSum - A Calibri 11AA = = = Dr Wrap Text General B I U D- A E S E E Merge & Center - $ % & ... Conditional Format Formatting as Table Styles Cell Styles Insert Delete Format Fill Clear Sort & Filter Editing Find & Select Alignment Number Cells E Copy Paste Format Painter Clipboard CJ215 CB 205 Font Fax CC C D CE CE CH CH CI CI CK CL 206 FV= PV*(1+(r/m))^mn 207 208 a FIRST NATIONAL m=4, QUARTERLY COMPOUNDING 6000*(1+0.04/4))^(4+5) FV= 7321.14 SECOND NATIONAL m=1 6000*(1+0.04/1))^(105) FV= 7299.92 209 210 211 212 213 214 b 215 216 217 218 APY = [(1+r/m))^m - 1] FIRST NATIONAL (1+0.04/4))^4 - 1 4.06% (1+0.04/1))^1 - 1 4.00% SECOND NATIONAL 219 THIRD NATIONAL m=12 6000*(1+0.045/12)^(12*5) FV= 7510.77 220 221 c 222 223 N Rea H CAP STRU VALUE profit margin loan with points LOCK BOX DILUTION DOLLAR COST AVG EXPONPER APR CPI ear FVA 0 0 LOAN OPTIONSpv, fv, annuity ferences pva 52 53 BOU 130% -_ 0 ... B 9 . * ENG 27-11-2019