Using the formula,
FV = C(1+r)T
since it is compounded monthly, r becomes r/12 and T becomes nT i.e 3T since 3 years
FV = C(1+r/12)3T
12894 = 12000(1+r/12)36
r/12 = (12894/12000)1/36 - 1 = 0.2%
r/12 = monthly interest rate = 0.2%
(2) The balance in your saving account on 01/01/2013 was $12,000. On 01/01/2016 you check the...
(5) You have $130,000 today and want to deposit it into a saving account at Houston Cougar Bank. The clerk at the bank says if you make a deposit today, then your balance in 6 years will be $190,000. Assume the bank computes the interest rate compounded monthly. What is the interest rate per month offered by the bank? (Hint : This is similar to, fundamentally the same as, the question (2).) 1.0.4090 2. 0.43% 3. 0.47% 4. 0.50% 5.0.53%
The good news - saving $10 per month We continue with the same example: you deposit $10 per month into a savings account with an annual interest rate of 30%, compounded monthly. Use your formula f(r) to answer the following questions. (a) Determine the amount in the account after 1 year. How much is interest? (b) Determine the amount in the account after 10 years. How much is interest? (c) Determine the amount in the account after 45 years. How...
Develop an algorithm for computing the month - by -month balance in your saving account. You can make one transaction — a deposit or a withdrawal — each month. Interest is added to the account at the beginning of each month. The monthly interest rate is the yearly percentage rate 7%.
The good news is that SAVING uses the same geometric series formula as BORROWING money! Assume you deposit $10 per month into a savings account with an annual interest rate of 30%, compounded monthly (a) Sketch the graph representing the amount that you've DEPOSITED into the account after r years. Hint: you can determine this formula and graph the function easily.) (b) In another color, copy your graph of f (r) from the previous slide. This is the total amount...
You deposit $3,000 at the end of the year (k = 0) into an account that pays interest at a rate of 7% compounded annually. A year after your deposit, the savings account interest rate changes to 1 2% nominal interest compounded month y Five years after ur de o the savings account aga changes it interest rate this time e interest rate becomes 8% nominal interest compounded quarterly. Eight years after your deposit, the saving account changes its rate...
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Problem 1.3 In this example we will compare how the return to saving depends on how frequently interest is compounded. We say that interest is compounded annually if it is only paid once, at the end of the year. If the interest rate is the total return on such an investment is 1+ , reflecting interest and principal. If interest is compounded semi-annualy (twice a year), the return after the first six months is equal to 1+r/2. Assuming...
2.
Prepare the journal entry to record their issuance by Patey on
January 1, 2013. (If no entry is required for a
transaction, select "No journal entry required" in the first
account field.)
4.
Prepare the journal entry to record interest on June 30, 2013.
(If no entry is required for a transaction, select "No
journal entry required" in the first account field.)
5.
What is the amount related to the bonds that Patey will report
in its balance sheet...
2.
Prepare the journal entry to record their issuance by National
on January 1, 2013. (If no entry is required for a
transaction, select "No journal entry required" in the first
account field.)
4.
Prepare the journal entry to record interest on June 30, 2013.
(If no entry is required for a transaction, select "No
journal entry required" in the first account field.)
5.
Prepare the appropriate journal entries at maturity on December
31, 2016. (If no entry is...
You are about to retire. You suddenly realize you opened a saving account and deposited $1,000 in it 45 years ago. You have not deposited or withdrawn from the account since the first deposit. What is the balance of the account now? The interest rate is 5%/year, compounded annually. 1. $8,525 2. $8,985 3. $9,134 4. $9,254 5. $9,851
Question 2 Ho is now saving his money HK$2000 per month in a regular savings account of HSBC which offers him interest rate of 4%p.a. compound monthly. A bank teller suggest him to setup a monthly saving plan. The details are as follow Maturity of 5 years Fixed interest rate 8%p.a. compound quarterly A handling fee equivalent to 2% of the total investment amount for early withdrawal If he needs to use the money 4 years from now, should he...