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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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?
You have just opened a savings account which pays monthly interest at a rate of j12 = 5.5% p.a. You wish to accumulate $20,000 by depositing the same amount into the account at the end of each month, for 2 years, starting in a month's time. a) Determine the required size for the monthly deposit, R. Apply a sanity check. b) Construct a sinking fund table showing 24 deposits with a fixed interest rate of 5.5%. Describe and apply a sanity check to your table. c) Suppose that the interest rate is renewed every three months (quarterly) over the course of the two years as follows: Year 1 Q1 5.5% 02 Q3 2.8% 4.5% 04 01 4.0% 4.2% Year 2 Q2 04 03 3.8% 2.5% 7.5% If you maintain the same monthly deposit of R determined in part a), find the size of your sinking balance after two years. Will you meet your target of $20,000? Describe and apply a sanity check for your answer. d) Construct a sinking fund table showing 24 deposits with the variable interest rate. Describe and apply a sanity check to…
Say you barrowed $10,000 from a bank at 12% interest rate per year for aperiod of 10 years. How much will you have to pay back after 10 years, ifa. The bank charged you simple interest? b. The bank charged you compound interest? please solve manually
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
You are comparing two banks. One bank is online and offers a savings account interest rate of 1.75% compounded quarterly. One bank is in your hometown and offers a savings account interest rate of 1.72% compounded daily. You have $4500 to keep in a savings account for 2 years, so you need to decide which bank would pay more interest. The online bank has an APY of what percentage? Round your percentage to three decimal places) 1.762 The hometown bank has an APY of what percentage? Round your percentage to three decimal places) 1.735 %. ✔ %. Therefore if you invest the same amount of money for the same amount of time, the bank that pays more interest is O Online bank O Hometown bank Enter a number. How much more interest would you earn at the bank you just selected compared to the other bank? State your result rounded to two decimal places. Hint: You will need to use the original investment information to calculate the interest earned on each account.
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 ?
NEKO Inc. maintains a cash buffer for unexpected cash outlays for the year amounting to 3,000. Bank of WildPUS charges NEKO P15 for every transaction with the bank. The bank grants 5% annual interest. NEKO is contemplation if it will still need to have the cash buffer. How much is the annual savings in annual holding cost of cash for NEKO if it will not have a cash buffer?
D3)
You wish to invest ₱10,000 for a period of 5 years. Which of the following investments would be best for you? Defend your answer in choosing the bank with the best investment by creating a report showing the comparison of each bank.Bank A: 3.75% simple interest rateBank B: 3.25% compounded annuallyBank C: 3.25% compounded quarterlyBank D: 3.25% compounded monthlyBank E: 3.15% compounded daily
It's the first day of the year and you currently have $3,500 in the bank. You plan to deposit $200 at the end of every year for the next 56 years, with the first payment made 1 year from now (payments from t=1 to t=56 inclusive). If bank interest rates are 1% pa, how much money will be in your bank account a moment after making your last deposit in 56 years? Question 3 Select one: a. $6,110.33 b. $14,654.33 c. $14,700 d. $21,026.53 e. $21,236.8
A local bank is running the following advertisement in the newspaper: "For just $2,000 we will pay you $180 forever!" The fine print in the ad says that for a $2,000 deposit, the bank will pay $180 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.)

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