A friend asks to borrow $53.00 from you and in return will pay you $56.00 in one year. If your bank is offering a 5.7% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $53.00 instead? b. How much money could you borrow today if you pay the bank $56.00 in one year? c. Should you loan the money to your friend or deposit it in the bank? a. How much would you have in one year if you deposited the $53.00 instead? If you deposit the $53.00 in the bank today, you will have $ in one year. (Round to the nearest cent.)

A friend asks to borrow $53.00 from you and in return will pay you $56.00 in one year. If your bank is offering a 5.7% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $53.00 instead? b. How much money could you borrow today if you pay the bank $56.00 in one year? c. Should you loan the money to your friend or deposit it in the bank? a. How much would you have in one year if you deposited the $53.00 instead? If you deposit the $53.00 in the bank today, you will have $ in one year. (Round to the nearest cent.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Related questions

Q: You need to turn $11,827 dollars into $18,864 dollars in 7 years. Assuming you make no extra…

A: Future Value = Present Value * (1+r)^nWhere,r = rate of interest per periodn = no. of compounding…

Q: If your uncle borrows $70,000 from the bank at 12 percent interest over the ten-year life of the…

A: Annual payment refers to the payment that is made each year including interest and principal for…

Q: You want to buy a $183,000 home. You plan to pay 10% as a down payment, and take out a 30 year loan…

A: The down payment is the amount of cash paid while purchasing the home. The down payment decreases…

Q: Today, you borrowed $6,200 on your credit card to purchase some furniture. The interest rate is 14.9…

A: Compound = monthly = 12 Present value = pv = $6200 Interest rate = r = 14.9 / 12% Payment = p =…

Q: borrow $200 from your friend, and she agrees to let you pay it back in a year-and-a-l A. Your friend…

A: The note payable is the liability for the business and note receivable is an asset for the business.…

Q: ou want to buy a home but not take out a mortgage. You want to buy it outright when you are able to…

A: Future value is the value of present cashflow compounded to future date at specified rate. formula:…

Q: merchant receives an invoice for $8000 with terms 2/10, n/50. a) What is the maximum interest rate…

A: Discount is the amount to be paid less than actual prices and that is done for the early payment of…

Q: (1)You decide to purchase a new home and need a $100000 mortgage. You take out a loan from the bank…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: A friend asks to borrow $54 from you and in return will pay you $57 in one year. If your bank is…

A: Future value of an amount is calculated as follows: FV = PV*(1+r)t Where, FV = Future value of…

Q: A woman went to the Beneficial Loan Company and borrowed ST0,000. She must pay $323.53 At the end of…

A: Monthly interest rate can be calculated by excel formula PMT and by IRR formula with series of cash…

Q: You Save Bank has a unique account. If you deposit $7,250 today, the bank will pay you an annual…

A: In this case, the bank uses different interest rates for different periods, so we'll need to apply…

Q: Suppose someone offered to sell you a note (an investment) that calls for $1,000 payment two years…

A: .Future Value (FV) :FV represents the projected worth of an initial sum of money at a specific point…

Q: Wants to loan from a certain bank. He asks you for a piece of advice for him to save from the loan.…

A: To analyse the given options, we shall compare the effective interest rate which can be calculated…

Q: Your friend offers to pay you an annuity of $7,700 at the end of each year for 3 years in return for…

A: Cash flow, C = $7700 No. of periods, n = 3 rate of interest, i = 5.5%

Q: How much should you deposit now into a certificate of deposit (CD) at a bank, if the CD matures 10…

A: To calculate the principal amount deposit in the bank , we have to use the following formula : A = P…

Q: You are planning on buying a new car. You need to finance $32,500 for the purchase. The bank will…

A: Present value of annuity is computed by following formula:-PV = A*wherePV = Present value of…

Q: You have just taken out a five-year loan from a bank to buy an engagement ring. The ring costs…

A: correct answer is option a) year 0 year 1 year 2 year 3 year 4 year 5 cash…

Q: You lend a friend $13,000, for which your friend will repay you $49,591 at the end of 6 years.…

A: Interest rate = (Future value / Present value)^(1/Time) - 1 where, Future value = $49,591 Present…

Q: You plan to borrow $1,000 from a bank. In exchange for $1,000 today, you promise to pay $1,130 in…

A: The objective of the question is to understand the cash flow timeline from both the borrower's and…

Q: parents shop around and a different bank is willing to lend them a $750,000 30-year mortgage with…

A: Mortgage loans are secured loans and very easy to get and pay with equal monthly payments.

Question

A friend asks to borrow $53.00 from you and in return will pay you $56.00 in one year. If your bank is offering a 5.7% interest rate on deposits and loans:
a. How much would you have in one year if you deposited the $53.00 instead?
b. How much money could you borrow today if you pay the bank $56.00 in one year?
c. Should you loan the money to your friend or deposit it in the bank?
a. How much would you have in one year if you deposited the $53.00 instead?
If you deposit the $53.00 in the bank today, you will have $ in one year. (Round to the nearest cent.)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Explain the Present value and the future value

VIEW

Step 2: Calculate the Interest Earned

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Money Management and Achieving Financial Goals

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

You want to buy a $216,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan at 3.25% interest for the rest.a) What is the amount of the down payment?b) What will the amount of the mortgage?c) The bank charges 2 points on the loan. What is the amount charged for points?
Graduation is 2 years away and you want to have $1000 available for a trip. If your bank is offering a 2-year CD (certificate of deposit) paying 2.6% simple interest, how much do you need to put in this CD to have the money for your trip? +A $
Answer the following question using a spreadsheet and the material in the appendix. You would like to buy a house. Assume that given your income, you can afford to pay $12,000 a year to a lender for the next 30 years. If the interest rate is 7% how much can you borrow today based on your ability to pay? What about if the interest rate is 3%? Maximum mortgage at 7%: $ Maximum mortgage at 3%: $
How much would your investment be worth if you deposited $5,555.55 into a bank that paid simple interest of 4% for 10 years?
Assume that a broker agent introduces you to a local bank, and that bank offers you their lowest interest rate at 3.25% APR, with a 10-year fixed interest rate or 20-year fixed interest rate. 1) If you want a 10-year, fixed mortgage loan, find the monthly mortgage payment for a house that you will borrow $500,000 with no down payment. 2) Determine the total amount paid over the full term of the loan. 3) How much interest will be paid on the loan over the 10 years?
You want to buy a house for $250,000. The bank requires a down payment of 25%. What is the amount of the mortgage loan the bank will provide for you? Round to the nearest $ and use the $ symbol.
3. Compound interest Old Time Savings Bank pays 4% interest on its savings account. If you deposit $1,000 in the bank and leave it there: a. How much interest will you earn in the first year? b. How much interest will you earn in the second year? c. How much interest will you earn in the tenth year?
4. You want to deposit $600 in a savings account. Account A earns 3.5% simple interest per year. Account B earns 3.3% interest compounded annually. a. Which account should you choose if you invest your money for 3 years? 6 years? Explain. b. After how many years is the balance in Account B greater than the balance in Account A? c. After how many years is the difference between the account balances greater than $5?
Graduation is 4 years away and you want to have $900 available for a trip. If your bank is offering a 4-year CD (certificate of deposit) paying 3.4% simple interest, how much do you need to put in this CD to have the money for your trip?
5. You take $100 to your local savings bank to invest for five years. You are given the choice of two investments by the banker Notifications Time Left 00:00:28 ? Guide Me 1. You can Invest in a regular savings account that pays you 14.00% interest each year with interest compounded annually. That is each year the interest you can gets deposited in your bank account and earns interest until the end of the five years. it. You can invest in a special account that pays you 20.00% interest each year, the catch is that the interest does not compound, Rattier each year the interest payrrient is put into a special account which collects no further interest and cannot be reinvested anywhere until the end of the five years Which option should you select and why? a, Select Option i: It earns $44.63 more than Optianill b. Both Options earn you the same amount of money so you are indifferent between the two c. Select Option it It earns $7.46 more than Option d. Select Option it It earns $30.00…
You are a financial adviser, and your client wants to save $6,000 in order to make a downpayment for a car in two years. Your bank offers a savings account which pays 3.6% compounded quarterly. The client wishes to make deposits at the end of each three-month period. What is the amount of the annuity the client needs to pay in order to meet the goal? (Choose the closest number.) a) $718.44. b) $726.69 c) $734.16 d) $741.92 e) None of these. ENG 令 CMS
You borrow $100,000 from a bank to buy a house. Is this mortgage loan an asset or liability on the bank's balance sheet? Question 29 options: Asset Liability

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS