k. Five banks offer nominal rates of 9% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. Assume 365 days in a year. 1. What effective annual rate does each bank pay? If you deposit $4,500 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? Round your answers to two decimal places. A B с D E EAR 9 % 9.20 % 9.31 % 9.38 % 9.42 % FV after 1 year FV after 2 years $ 4,905 5,346.45 4,914.11 5,366.33 $ $ 4,918.87 5,376.74 4,922.13 4,923.73 $ 5,383.86 5,387.36 2. If the TVM is the only consideration, what nominal rate will cause all of the banks to provide the same effective annual rate as Bank A? Round your answers to two decimal places. Nominal rate B C 8.81 % 8.72 % E 8.65 % 8.62 % 3. Suppose you don't have the $4,500 but need it at the end of 1 year. You plan to make a series of deposits annually for A, semiannually for B, quarterly for C, monthly for D, and daily for E-with payments beginning today. How large must the payments be to each bank? Round your answers to the nearest cent. A B Payment $ 4,128.44 $ C D $ E

k. Five banks offer nominal rates of 9% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. Assume 365 days in a year. 1. What effective annual rate does each bank pay? If you deposit $4,500 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? Round your answers to two decimal places. A B с D E EAR 9 % 9.20 % 9.31 % 9.38 % 9.42 % FV after 1 year FV after 2 years $ 4,905 5,346.45 4,914.11 5,366.33 $ $ 4,918.87 5,376.74 4,922.13 4,923.73 $ 5,383.86 5,387.36 2. If the TVM is the only consideration, what nominal rate will cause all of the banks to provide the same effective annual rate as Bank A? Round your answers to two decimal places. Nominal rate B C 8.81 % 8.72 % E 8.65 % 8.62 % 3. Suppose you don't have the $4,500 but need it at the end of 1 year. You plan to make a series of deposits annually for A, semiannually for B, quarterly for C, monthly for D, and daily for E-with payments beginning today. How large must the payments be to each bank? Round your answers to the nearest cent. A B Payment $ 4,128.44 $ C D $ E

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 2STP

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