For life insurance policies, some of the premium pays for the cost of the insurance, and the remainder goes toward the cash value of the policy and earns interest like a savings account. Consider the following insurance company options. Company 1: pays 4.9% compounded monthly on the cash value of their policies Company 2: pays 4.92% compounded semiannually on the cash value of their policies What is the APY (annual percentage yield) offered by each company? (Round your answers to the nearest hundredth.) Company 1 % % Company 2 Which company offers a higher yield? Company 1 Company 2
For life insurance policies, some of the premium pays for the cost of the insurance, and the remainder goes toward the cash value of the policy and earns interest like a savings account. Consider the following insurance company options. Company 1: pays 4.9% compounded monthly on the cash value of their policies Company 2: pays 4.92% compounded semiannually on the cash value of their policies What is the APY (annual percentage yield) offered by each company? (Round your answers to the nearest hundredth.) Company 1 % % Company 2 Which company offers a higher yield? Company 1 Company 2
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Question
Transcribed Image Text:For life insurance policies, some of the premium pays for the cost of the insurance, and the remainder goes toward the cash value of the policy and earns interest like a savings account.
Consider the following insurance company options.
Company 1: pays 4.9% compounded monthly on the cash value of their policies
Company 2: pays 4.92% compounded semiannually on the cash value of their policies
What is the APY (annual percentage yield) offered by each company? (Round your answers to the nearest hundredth.)
Company 1
%
%
Company 2
Which company offers a higher yield?
O Company 1
O Company 2
Transcribed Image Text:Suppose an individual makes an initial investment of $3,000 in an account that earns 7.8%, compounded monthly, and makes additional contributions of $100 at the end of each month for a period of 12 years. After these 12 years, this individual wants to make withdrawals
at the end of each month for the next 5 years (so that the account balance will be reduced to $0). (Round your answers to the nearest cent.)
(a) How much is in the account after the last deposit is made?
$
(b) How much was deposited?
$
(c) What is the amount of each withdrawal?
$
(d) What is the total amount withdrawn?
$
Expert Solution
Step 1
As per company guidelines we are allowed to solve one question at a time so i am solving first one please resubmit the the remaining ones. thank you.
1.
The Formula for APY is given as,
where,
So, for Company 1: compounded monthly. so,
Now, put the values into the formula,
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