Answered: Mac has deposited $6,000 in a money…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Mac has deposited $6,000 in a money market account with a variable interest rate. The account compounds the interest monthly. Jack expects the interest rate to remain at 8% annually for the first 3 months, at 9% annually for the next 3 months, and then back to 8% annually for the next 3 months. Find the total amount in this account after 9 months.

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Expert Solution

Step 1

Deposited amount = $6000

Time period = 9 months

The interest rate is 8%, 9%, and 8%.

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