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

See similar textbooks

Similar questions

You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
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 $6,000 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 E EAR % % % %24 24 FV after 1 year $ $4 2$ $4 FV after 2 years %24 2$ $ 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. A-Z office Nominal rate % % % % 3. Suppose you don't have the $6,000 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 D Payment $4…
k. Five banks offer nominal rates of 10% 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. What effective annual rate does each bank pay? If you deposit $3,500 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 C D E EAR % % % % % FV after 1 year $ $ $ $ $ FV after 2 years $ $ $ $ $ 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. B C D E Nominal rate % % % % Suppose you don't have the $3,500 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…
Please correct answer and don't use hand rating
Suppose that you deposit $750 into a bank account today. If the bank pays 8 percent APR per year, compounded quarterly, how much will be in the account at the end of 4 years.A. $812 84B. $750.00C. $1,029.59D. $927.52E. $1.020.37
It is now January 1, 20x8. Today you will deposit P100,000 into a savings account that pays 8%. a. If the bank compounds interest annually, how much will you have in your account on January 1, 20x9? b. What will your January 1, 20x9 balance be if the bank uses quarterly compounding
K You plan to deposit $700 in a bank account now and $100 at the end of the year. If the account earns 7% interest per year, what will be the balance in the account right after you make the second deposit? ... The balance in the account right after you make the second deposit will be $ (Round to the nearest dollar.)
A bank account pays 5.5% annual interest, compounded monthly. How long will it take the money to double in this account? If the present value is Rs.1, its future value is Rs.2. The bank is compounding monthly; thus, the interest rate is 5.5/12 percent per month.
2.26. A downtown bank is advertising that if you deposit $1,000 with them, and leave it there for 65 months, you can get $2,000 back at the end of this period. Assuming monthly compounding, what is the monthly rate of interest paid by the bank?
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 Payment B 5.91 $ A % 2,830.19 C 5.88 B % 3. Suppose you don't have the $3,000 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. $ D с 5.84 % $ D E 5.83 $ % E
Bank A pays 7% simple interest on its savings account balances. Bank B pays 5.5% interest compounded annually. If you deposit $15,000 in both banks, a. How many years will it take for your balance to double in Bank A? b. What is the amount of interest earned in each bank at the end of 10 years? Which bank would you choose to open the savings account?
4) Find the account balance at the end of 10 years, if you deposit 15,000 in an account today if a. The bank pays interest at 12% per year. b. The bank pays interest at 6% every 6 months. c. The bank pays interest at 3% per quarter, d. The bank pays interest at 1% per month. What do you observe when you compare the balances for the four scenarios listed.