Melvin Indecision has difficulty deciding whether to put his savings in Mystic Bank or Four Rivers Bank. Mystic offers 8% interest compounded semiannually. Four Rivers offers 6% interest compounded quarterly. Melvin has $12,500 to invest. He expects to withdraw the money at the end of 8 years. Calculate interest for each bank and identify which bank gives Melvin the better deal? (Use the Table provided.) (Do not round intermediate calculations. Round your answers to the nearest cent.) Interest Mystic Four Rivers Better deal
Melvin Indecision has difficulty deciding whether to put his savings in Mystic Bank or Four Rivers Bank. Mystic offers 8% interest compounded semiannually. Four Rivers offers 6% interest compounded quarterly. Melvin has $12,500 to invest. He expects to withdraw the money at the end of 8 years. Calculate interest for each bank and identify which bank gives Melvin the better deal? (Use the Table provided.) (Do not round intermediate calculations. Round your answers to the nearest cent.) Interest Mystic Four Rivers Better deal
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
Related questions
Question
Transcribed Image Text:Future value interest factor of $1 per period at i% for n periods, FVIF(in).
Period 0.5% 10% 15% 20%
3.0%
1
6
8.0%
1.0800
1.1664
1.2597
1.3605
1.4693
1.5859
1.7138
1.8509
1.9990
2.1589
23316
25182
2.7196
9.0%
1.0900
1.1881
1.2950
1.4116
1.5386
1.6771
1.8280
1.9926
2.1719
2.3674
2.5804
28127
3.0658
1.0050 10100 10150 1.0200
2 1.0100 1.0201 1.0302 10404
3 1.0151 1.0303 1.0457 1.0612
4 1.0202 1.0406 1.0614 1.0824
1.0253 1.0510 1.0773 1.1041
5
1.0304 1.0615 10934 1.1252
1.0355 1.0721 1.1098 1.1487
1.0407 1.0829 1.1265 1.1717
1.0459 1.0937 1.1434 1.1951
1.0511 1.1046 1.1605 12190
1.0564 1.1157 1.1779 12434
12 1.0617 1.1258 1.1956 12682
13 1.0570 1.1381 12136 12936
14 1.0723 1.1495 1.2318 13195
15 1.0777 1.1610 12502 13459
16 1.0831 1.1726 1.2690 1.3728
17 10885 1.1843 12880 1.4002
18 1.0939 1.1961 1.3073 1.4282
19 1.0994 12081 1.3270 1.4568
20 1.1049 1.2202 1.3469 1.4859
21 1.1104 1.2324 13671 15157
22
7
8
9
10
11
1.4106
1.3439
2.9372
3.1722
3.4259
3.7000
3.3417
3.6425
3.9703
4.3276
4.7171
5.1417
5.6044
6.1008
3.7975
4.1772
4.5950
5.0545
5.5599
6.1159
6.7275
3.9960
4.3425
47116
4.3157
46610
5.1120
6.1416
7.4002
5.0338 5.5466
5.4365 6.0180
58715
6.7251
7.3639
6.6586
7.2579
8.0635
8.1403
8.9543
9.8497
5.6729
6.3412
7.9111
8.8296
2.5%
3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5%
1.0250 1.0300 1.0350 1.0400 1.0450 1.0500 1.0550 1.0600 1.0650 1.0700 1.0750
1.0506 1.0509 1.0712 1.0816 1.0920
1.1025
1.1130
1.1236 1.1342 1.1449
1.1556
1.0769 1.0927 1.1087 1.1249 1.1412 1.1576 1.1742 1.1910 12079
1.2250
12423
1.1255
1.1038
1.1475 1.1699 1.1925 1.2155 1.2388 1.2625 1.2865 1.3108 1.3355
1.1314 1.1593 1.1877 12167 1.2462 12763 1.3070 1.3382 1.3701 1.4025
1.4356
1.1597
1.1941 1.2293 1.2653 1.3023 1.3401 1.3788 1.4185 1.4591 1.5007 1.5433
1.1887 1.2299 12723 1.3159 1.3509 1.4071 1.4547 1.5036 15540 1.6058
1.6590
1.2184 12668 1.3168 1.3586 1.4221 1.4775 1.5347 1.5938 1.6550 1.7182 1.7835
1.2489 1.3048 1.3629 1.4233 1.4861 1.5513 1.6191 1.6895 1.7626 1.8385 1.9172
1.2801
1.4802 1.5530 1.6289 1.7081 1.7908 1.8771 1.9672 20610
1.3121 1.3842 1.4500
16229
1.5395
1.7103
1.8021 1.8983 1.9992 2.1049 22156
1.3449 1.4258 1.5111 1.6010 1.6959 1.7959 1.9012 20122 2.1291
2.2522
2.3818
1.3785
1.4685 1.5640 1.6651 1.7722 1.8856 20058 2.1329 22675 24098 2.5604
14130 1.5126 1.6187 1.7317 1.8519 1.9799
21161 22609 24149 2.5785
2.7524
14483 1.5500 1.6753 1.8009 1.9353 2.0789 2.2325 2.3966 25718 27590 2.9589
1.4845 1.6047 1.7340 1.8730 20224 2.1829 2.3553 2.5404 2.7390 2.9522 3.1808
15216 1.6528 1.7947 1.9479 21134 2.2920
24848
2.6928 29170 3.1588 3.4194
1.5597 1.7024 1.8575 2.0258 2.2085 2.4066 26215 28543 3.1067 3.3799 3.6758
15087 1.7535 1.9225 2.1068 2.3079 2.5270 2.7656 30256 3.3005 36165 3.9515
1.6386 1.8061 1.9090 2.1911 24117 2.6533 2.9178 3.2071 3.5236 3.8597 4.2479
1.6796 1.8603 20594 22788 25202 2.7950 3.0782 3.3996 3.7527 4.1405
1.7216
4.5664
1.9161 21315 2.3699 26337 29253 32475 3.6035 3.9966 4.4304
4.9089
1.7646 1.9736 2.2061 24647 27522 30715 3.4262 3.8197 4.2564 47405
52771
1.8087 2.0328 2.2833 2.5633 2.8760 32251 3.6146 4.0489 4.5331 5.0724
1.8539 2.0938 2.3632 2.6658 3.0054 3.3864 3.8134 4.2919 4.8277 5.4274 6.0983
1.9003 2.1566 24460 27725 3.1407 3.5557
4.0231
1.9478
45494 5.1415 58074 6.5557
22213 25316 28834 3.2820
10.5869
3.7335 42444 48223 54757
1.9965
6.2139 7.0474
7.9881
2.2879 26202 2.9987
11.5926
3.4297
4.4778
5.1117 5.8316 6.6408 7.5759
20464 23566 27119 3.1187
8.6271
35840
12.6939 14.4210
4.1161 4.7241 5.4184 62107 7.1143 8.1441
9.3173
2.0976 24273 28068 32434
10 6528 12.1722
3.7453
13.8998 15.8531
4.3219 4.9840 5.7435 6.6144 7.6123 8.7550 10.0627
2.5001 2.9050 3.3731
11.5583 13.2677
3.9139 4.5380
15.2203 17.4494
5.2581 60881 7.0443 8.1451 9.4116 10.0677 12.5407 14.4618 16.6662
4.0900 47649
19.1943
5.5473 64534 7.5022 8.7153 10.1174 11.7371 13.6067 15.7633 18.2495
42740 5.0032
21.1138
58524 6.8406
7.9898 9.3253
10.8763 12.6760 14.7632 17.1820
4.4664
19.9832
5.2533 6.1742 7.2510 8.5092 99781 11.6920 13.6901 16.0181 18.7284
46673
21.4016
55160 6.5138 7.6061 90623 106766 12.5689 14.7853 17.3796 20.4140
48774
23.9604
6.8721 8.1473
9.6513 11.4239 13.5115
18.8569 22.2512 26.2366
7.2501 8.6361 102786 12.2236 14.5249 17.2456 20.4597
7.6400 9.1543 10.9457 13.0793 15.6143 18.6253 22.1988
80195 9.7035 11.6583 13.9948 16.7853 20.1153 24.0857
85133
10.2857 12.4161
14.9745 18.0442 21.7245 26.1330
9815 10.9029 13.2231 16 0227 19.3976 23.4625 28.3543
7.7616 94755 11.5570 14.0826 17.1443 20 8524 25.3395 30.7644
8.1497 9.9957 12.2505 14.9900
18.3444
22.4163 27.3666 33.3794
8.5572 10.5465 12.9055 15.9729
19.6285 24.0975 29 5560 36.2167
8.9850 11.1266 13.7646 17.0111 21.0025
31.9204 39.2951
9.4343 11.7385 145905 18.1168 22.4725
34.4741
42.6352
9.9050 12.3841 15.4559 19.2944 24.0457
10.4013 13.0653 16.3939 20.5485 25.7289
10.9213 13.7838 17.3775 21.8842 27.5299
11.4574 145420 18.4202 23 3067 29 4570
6.8485
7.5868
8.6231
96684
7.3964
8.3401
9.3992
1.1160 1.2447 1.3876 1.5460
1.1216 1.2572 1.4084 1.5769
1.1272 1.2697 1.4295 1.6004
1.1328 1.2824 1.4509 16405
1.1385 1.2953 14727 1.6734
1.1442 1.3082 1.4948 1.7069
1.1499 1.3213 15172 1.7410
1.1556 1.3345 15400 1.7758
1.1614 1.3478 15631 1.8114
1.1672 1.3613 1.5855 1.8476
1.1730
16103 1.8845
1.1789 1.3887 1.6345 1.9222
10 8347
11.9182
13.1100
3.9201
9.0490 102451
98182 11.1671
23.2252
1.1840 1.4025 1.6590 1.9507
25.5477
1.1907 1.4166 1.6839 1.9999
5.7910
15.9682
2.1500
22038 25751
2.2589 2.6523
2.3153 2.7319
2.3732
1.7091 2.0399 24325
1.7348 2.0807 2.4933
1.7608 2.1223 2.5557
1.7872 2.1647 26196
18140 22000 26851
1.8412 2.2522 2.7522
2.8210
28915
3.0067
3.5081
31119 36484
32209 3.7943
28139 3.3336 39461
2.8903 3.4503 4.1039
2.9852 3.5710 4.2681
30748 36960 4.4388
3.1670
3.2620
3.3599
1.1967 1.4308
12027 14451
1.2067 1.4595
1.2147 14741
5.0969
6.0814
28.1024
30 9127
34.0039
37.4043
41.1448
5.3262
6.3855
3.8254 46164
5.5650
6.7048
3.9593
4.8010
5.8164
7.0400
45.2593
1.2208 1.4809
1.2269 15038
1.2330 1.5188
40978
4.9931
7.3920
1.8688 2.2972
3.4607
42413
5.1928
6.3516
24.2538 28.7291
26.4367 31.4504
28 8160 34.4469
31.4004
37.7194
34.2363 41.3027
37.3175
45.2265
40.6761 49 5230
54.2277
59.3793
65 0204
71.1973
5.4005 66374
1.2392 1.5340 1.8969 23432
12454 15493 1.9253 2.3901 29638
12516 1.5648 1.9542 24379
44.3370
49 7852
54.7637
60.2401
66.2641
72.8905
80 1795
88.1975
48.3273
3.5645 4.3897
3.6715 45433 56165 6.9361
3.0379 3.7816 4.7024 58412 72482
12579 1.5805 1.9835 2.4865 3.1139 3.8950 4.9669 60748 75744
12642 1.5963 20133 25363 3.1917 40119 50373 63178 7.9153
1.2705 16122 20435 25871 3.2715 4.1323 52136 65705 8.2715
12768 1.6283 20741 26388 3.3533 4.2562 5.3961 6.8333
8.6437
12832 16446 2.1052 26916 34371 4.3839 55849 7.1067 90325
52.6767
46.2592
57.4176
25 9048
27,8477
29.9363 372320
32.1815 40 2106
34.5951
37.1997
77.9611
50.1912 62.5852
97.0172
54.4574 68.2179 85.3674 106.7190
45.9016 59.0863 74.3575 93.4773 117.3909
23
24
25
Interest
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
45
47
40
49
50
Melvin Indecision has difficulty deciding whether to put his savings in Mystic Bank or Four Rivers Bank. Mystic offers
8% interest compounded semiannually. Four Rivers offers 6% interest compounded quarterly. Melvin has $12,500 to
invest. He expects to withdraw the money at the end of 8 years.
Mystic
8.5%
1.0850
1.1772
1.2773
1.3859
1.5037
1.6315
1.7701
1.9206
2.0839
22610
2.4532
26617
2.8879
3.1334
3.3997
3.6087
4.0023
Calculate interest for each bank and identify which bank gives Melvin the better deal? (Use the Table provided.) (Do
not round intermediate calculations. Round your answers to the nearest cent.)
Four Rivers
6.5296
7,0846
Better deal
9.5%
1.0950
1.1990
1.3129
1.4377
1.5742
1.7238
1.8876
20669
2.2632
24782
27137
2.9715
32537
3.5629
3.9013
42719
46778
5.1222
56008
100%
1.1000
1.2100
13310
1.4541
1.6105
1.7716
1.9487
2.1436
2.3579
2.5937
2.8531
3.1384
3.4523
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