A local bank is running the following advertisement in the newspaper: "For just $4,000 we will pay you $400 forever!" The fine print in the ad says that for a $4,000 deposit, the bank will pay $400 every year in perpetuity, starting one year after the deposit is made. What interest rate is the bank advertising (what is the rate of return of this investment)? The interest rate the bank is advertising is %. (Round to the nearest integer.)

A local bank is running the following advertisement in the newspaper: "For just $4,000 we will pay you $400 forever!" The fine print in the ad says that for a $4,000 deposit, the bank will pay $400 every year in perpetuity, starting one year after the deposit is made. What interest rate is the bank advertising (what is the rate of return of this investment)? The interest rate the bank is advertising is %. (Round to the nearest integer.)

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

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Kindly show me the solution, thanks! ABC Corporation was approached by bank. The latter promised that it can speed up the check clearing process to 2 days for a monthly fee of P500. ABC currently deposits 30 check daily with an average value of P2,000. The current clearing process takes 6 days. ABC can earn 6% on money marketable securities. How much is the net advantage or (disadvantage) if ABC accepts the bank's offer?
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1. Compute the present value of a $2,000 deposit in year 1, and another $1,500 deposit at the end of year 3 if interest rates are 10 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.) 2. How much would be in your savings account in 8 years after depositing $300 today if the bank pays 8 percent per year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 3. What is the present value of a $1,300 payment made in five years when the discount rate is 10 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 4. What annual rate of return is earned on a $5,000 investment when it grows to $9,500 in five years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 5. A deposit of $270 earns the following interest rates: 8 percent in the first year. 6 percent in the second year. 5 percent in the third year. What would be the third year future…
17. You deposit $8,000 in a bank account today. You make another deposit of $14,000 into the account in year one and you make a third deposit of $10,000 in year two. The bank pays interest at 8 percent compounded annually. How much will you have in your account at the end of year 3? * O a) $37,207 b) $35,207 O c) $39,207 O d) $40,502 e) None of the above
ABC Corporation receives checks from its customers. The total check value averages 700,000 each day. It takes an average of 5 days from deposits for these to clear the bank. If the bank offers to accelerate the 5-day clearing process to 3 days for a monthly fee of 600. If ABC can earn 4% investment income from excess cash, how much is the net annual benefits/cost of this bank offer?
An investor has accumulated $6,800 and is looking for the best rate of return that can be earned over the next year. A bank savings account will pay 5%. A one-year bank certificate of deposit will pay 7%, but the minimum investment is $9,800. Required: Calculate the amount of return the investor would earn if the $6,800 were invested for one year at 5%. Calculate the net amount of return the investor would earn if $3,000 were borrowed at a cost of 15%, and then $9,800 were invested for one year at 7%. Calculate the net rate of return on the investment of $6,800 if the investor accepts the strategy of part b. Note: Round your answer to 2 decimal places.
I need answer typing clear urjent no chatgpt used i will give upvotes all answers pls
A local bank advertises the following deal: "Pay us $100 at the end of each year for 10 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever." a. Calculate the present value of your payments to the bank if the interest rate is 6%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the present value of a $100 perpetuity deferred for 10 years if the interest rate is 6%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
24) One of the local banks indicates that it computes the interest it pays on savings accounts by the continuous compounding method. Suppose you deposited $100 in the bank and they pay 4% per annum, compounded continuously. After 5 years, how much money will there be in the account? Select one: a. $ 122.14 b. $ 144.14 c. $ 322.14 d. $ 222.14 25) At 10% per year simple interest, how long will it take for a deposit of $1000 now to accumulate to $100,000? Select one: a. n=99 years b. n=50 years c. n=44 years d. n= 990 years 26) When only one alternative can be selected from two or more, the alternatives are said to be: Select one: a. subjective alternatives b. independent alternatives c. revenue alternatives d. mutually exclusive
Banca Monte dei Paschi di Siena has 300 depositors. Each depositor deposits $150 into the bank at time t=0. The bank promises each depositor 8% interest rate. Each depositor can either withdraw their money at t=1 or t=2. The bank uses the deposits to issue 2-year simple loans. If the bank faces a demand for withdrawal at t=1, it is able to sell its 2-year simple loans at the original loan value. If 200 depositors withdraw at t=1, what is the amount of payment (in $) each depositor who withdraws at t=2 receives? Round your answer to at least 2 decimal places.
Which do you prefer: a bank account that pays 5.0% per year (EAR) for three years or a. An account that pays 2.5% every six months for three years? b. An account that pays 7.5% every 18 months for three years? c. An account that pays 0.50% per month for three years? (Note: Compare your current bank EAR with each of the three alternative accounts. Be careful not to round any intermediate steps less than six decimal places.) If you deposit $1 into a bank account that pays 5.0% per year for three years: The amount you will receive after three years is $ (Round to five decimal places.)
Find the equivalent present worth of the cash receipts in the accompanying diagram, where i = 8% compounded annually. In other words, how much do you have to deposit now (with the second deposit in the amount of $1,000 at the end of the first year) so that you will be able to withdraw $600 at the end of the second year through the fourth year , and $ 800 at the end of the fifth year , where the bank pays you 8% annual interest on your balance ?

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