Donna deposits $20,000 into an account that pays simple interest at a rate of 4% per year. Tony deposits $20,000 into an account that also pays 4% interest per year. But it is compounded annually. Find the interest Donna and Tony earn during each of the first three years. Then decide who earns more interest for each year. Assume there are no withdrawals and no additional deposits. Year First Second Third Interest Donna earns (Simple interest) $0 $0 Interest Tony earns (Interest compounded annually) $0 $0 Who earns more interest? O Donna earns more. O Tony earns more. O They earn the same amount. O Donna earns more. O Tony earns more. O They earn the same amount. O Donna earns more. O Tony earns more. O They earn the same amount.

Donna deposits $20,000 into an account that pays simple interest at a rate of 4% per year. Tony deposits $20,000 into an account that also pays 4% interest per year. But it is compounded annually. Find the interest Donna and Tony earn during each of the first three years. Then decide who earns more interest for each year. Assume there are no withdrawals and no additional deposits. Year First Second Third Interest Donna earns (Simple interest) $0 $0 Interest Tony earns (Interest compounded annually) $0 $0 Who earns more interest? O Donna earns more. O Tony earns more. O They earn the same amount. O Donna earns more. O Tony earns more. O They earn the same amount. O Donna earns more. O Tony earns more. O They earn the same amount.

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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Fritz Benjamin buys a car costing $18900. He agrees to make payments at the end of each monthly period for 8 years. He pays 8.4% interest, compounded monthly. What is the amount of each payment? Find the total amount of interest Fritz will pay. Fritz's monthly payment is $ (Round to the nearest cent.) Fritz will pay a total of $ in interest. (Round to the nearest cent.)
1 ) Suppose that Smith is currently age 16. Smith’s parents pay $25,000 for the right to provide Smith with payments of $K every two months, beginning two months after his 18th birthday and continuing indefinitely. Assume that the nominal annual interest rate is i (6) = 9% until Smith turns age 21, at which point the rate changes to i (6) = 24% thereafter. Find $K.
Sandra takes out a $ 22000 loan to be paid back in monthly payments of P over the next five years. The nominal interest rate is 9 % compounded monthly. After making the first payment one month from the date of the loan, she begins a habit of skipping two monthly payments after each payment of P. Determine the loan balance five years after taking out the loan.
13) Jane needs $30,000 to buy another new car in eight years. How much should she deposit at the end of each half year into an account that earns 4% interest compounded semiannually? A) $1263.36 B) $1663.37 C) $1609.50 D) $160.95 E) none of these
Please provide both solution
4) Megan invests $2,000 at the end of each year into an account earning 3% effective annual interest. She reinvests the interest earned at the end of each year into a second account that will earn her 7% effective annual interest. How much is in the second account after 35 years? Also, fill in the following table (or, redraw the table on your solution sheet being handed in and fill it in). Year Amount in 1st account Amount deposited into 2nd account 0 1 2 3 : : 34 35
Morgan received a $29,050 loan from a bank that was charging interest at 3.25% compounded semi-annually. a. How much does she need to pay at the end of every 6 months to settle the loan in 6 years?
Timothy received a $39,550 loan from a bank that was charging interest at 3.75% compounded semi-annually. a. How much does she need to pay at the end of every 6 months to settle the loan in 3 years? Round to the nearest cent b. What was the amount of interest charged on the loan over the 3-year period? Round to the nearest cent
Liz buys a new car for $18,600. She puts 15% down and obtains a simple interest amortized loan for the balance at 6. 25% for 5 years. Find her monthly payment and the total interest paid.
Jane invests $700 at the end of each year for 5 years. If interest is paid at 7%/a compounded semiannually, how much will the investment be worth immediately after the last deposit is made? $28,183 $3.753 $8,211 $9,671
Gisella borrows $120, 000 from Capital Mortgage Co. at 9% per annum interest, monthly payments for 30 years. At the end of 6 years, she sells the house and will pay off the loan at the closing of sale (assume that the sale takes place at the end of the sixth year). What will her loan payoff be? Using excel functions only and an amortization schedule.
Interest Earned. On June 1, Mia deposited $5,600 in an MMDA that pays 3% interest. On October 31, Mia invested $1,200 in a three-month CD that pays 4%. At the end of the year, how much interest will Mia have earned, assuming she hasn't taken anything out of the money market deposit account? Assuming she hasn't taken anything out of the money market deposit account, the amount of interest Mia will have earned is (Round to the nearest cent.).

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