Melvin Indecision has difficulty deciding whether to put his savings in Mystic Bank or Four Rivers Bank. Mystic offers 10% interest compounded semiannually. Four Rivers offers 8% interest compounded quarterly. Melvin has $10,000 to invest. He expects to withdraw the money at the end of 4 years. Calculate interest for each bank and identify which bank gives Melvin the better deal? (Use the Table provid
Melvin Indecision has difficulty deciding whether to put his savings in Mystic Bank or Four Rivers Bank. Mystic offers 10% interest compounded semiannually. Four Rivers offers 8% interest compounded quarterly. Melvin has $10,000 to invest. He expects to withdraw the money at the end of 4 years. Calculate interest for each bank and identify which bank gives Melvin the better deal? (Use the Table provid
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Melvin Indecision has difficulty deciding whether to put his savings in Mystic Bank or Four Rivers Bank. Mystic offers 10% interest compounded semiannually. Four Rivers offers 8% interest compounded quarterly. Melvin has $10,000 to invest. He expects to withdraw the money at the end of 4 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 dollar amount.)
Transcribed Image Text:Future value interest factor of $1 per period at i% for n periods, FVIF(i,n).
Period 0.5%
1.0%
2.0%
2.5%
3.0%
3.5%
1.0350
1.0712
5.0%
1.0500
1.1025
1.1576
1.2155
1.2763
1.5%
4.0%
4.5%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%
1.0750
1.0050 1.0100 1.0150 1.0200
1.0100 1.0201 1.0302 1.0404
1.0151 1.0303 1.0457 1.0612
1.0202 1.0406 1.0614 1.0824
1.0253 1.0510 1.0773 1.1041
1.0304 1.0615 1.0934 1.1262
1.0355 1.0721 1.1098 1.1487
1.0407 1.0829 1.1265 1.1717
1.0459 1.0937 1.1434 1.1951
1.0450
1.0650
1.1342
1.2079
1.0250
1.0300
1.0400
1.0550
1.0600
1.0700
1.0800
1.0850
1.0900
1.0950
1.1000
1.0506
1.0609
1.0816
1.1236
1.1772
1.2773
1.3859
1.5037
1.0920
1.1130
1.1449
1.1556
1.1664
1.1881
1.1990
1.2100
1.1742
1.2388
1.3070
1.3788
1.2597
1.2950
1.3129
1.4377
1.5742
1.7238
1.8876
1.0769
1.0927
1.1087
1.1249
1.1412
1.1910
1.2250
1.2423
1.3310
1.1255
1.1593
1.1475
1.1877
1.3355
1.4356
1.5433
1.6590
1.3605
1.4693
1.4116
1.5386
4.
1.1038
1.1699
1.1925
1.2625
1.2865
1.3108
1.4641
1.3701
1.4591
1.4026
1.5007
1.1314
1.1597
1.1887
1.2184
1.2489
1.2801
1.3121
1.2167
1.2462
1.3382
1.6105
1.1941
1.2299
1.3023
1.3609
1.6771
1.8280
1.2293
1.2723
1.3168
1.3629
1.7716
1.9487
2.1436
2.3579
2.5937
2.8531
1.2653
1.3401
1.4185
1,5869
1.6315
1.4547
1.5347
1.6191
1.6058
1.7182
1,8385
7.
1.3159
1.7138
1.4071
1.4775
1.5513
1.6289
1.5036
1.5540
1.7701
1.6550
1.2668
1.3048
1.3686
1.4221
1.5938
1.7835
1.9172
2.0610
2.2156
1.8509
1.9990
2.1589
2.3316
1.9206
2.0839
2.2610
2.4532
2.6617
2.8879
1.9926
2.0669
2.2632
2.4782
2.7137
9
1.4233
1.4802
1.5395
1.6010
1.4861
1.6895
1.7908
1.7626
1.8771
2.1719
2.3674
1.0511 1.1046 1.1605 1.2190
1.0564 1.1157 1.1779 1.2434
1.0617 1.1268 1.1956 1.2682
13
1.4106
1,4600
1.5530
1.6229
1.7081
1.8021
1.9012
10
1.3439
1.3842
1.4258
1.4685
1.9672
11
1.7103
1.8983
1.9992
2.1049
2.5804
12
1.3449
1.5111
1.6959
1.7959
2.0122
2.1291
2.2522
2.3818
2.5182
2.8127
2.9715
3.1384
1.0670 1.1381 1.2136 1.2936
1.0723 1.1495 1.2318 1.3195
1.3785
1.5640
1.7722
2.0058
2.1161
22675
2.4098
2.5604
2.7524
2.9589
3.1808
3.4194
3.6758
3.9515
4.2479
3.0658
3.3417
3.6425
3.9703
4.3276
4.7171
5.1417
5.6044
6.1088
6.6586
3.2537
3,5629
3.9013
1.6651
1.8856
2.1329
3.4523
2.7196
2.9372
3.1722
3.4259
3.7000
3.9960
4.3157
4,6610
5.0338
5.4365
14
2.2609
1.4130
1.4483
1.4845
1.5126
1.6187
1.8519
1.9353
2.0224
1.9479 2.1134
1.7317
1.9799
2.4149
2.5718
2.7390
2.9170
3.1067
3.3086
3.5236
3.7527
3.9966
4.2564
2.5785
3.1334
3.7975
4.1772
4.5950
15
1.0777 1.1610 1.2502 1.3459
1.5580
1.8009
1.6753
1.7340
1.7947
1.8575 2.0258 22085
1.9225 2.1068
2.0789
2.2325
2.3553
2.3966
2.7590
2.9522
3.1588
3.3799
3.6165
3.8697
4.1406
3.3997
3.6887
4.0023
4.3425
4.7116
5.1120
5.5466
6.0180
6.5296
7.0846
1.0831 1.1726 1.2690 1.3728
1.0885 1.1843 1.2880 1.4002
16
1.6047
1.8730
2.1829
2.5404
2.6928
2.8543
4.2719
17
1.6528
1.7024
1,7535
1,8061
1.8603 2.0594
1.9161
1.7646 1.9736 2.2061
1.8087 2.0328
1.8539 2.0938 2.3632
1.9003 2.1566
1.5216
1.5597
2.2920
2.4066
2.5270
2.6533
2.7860
2.4848
4.6778
5.1222
5.6088
6.1416
6.7251
7.3639
5.0545
5.5599
6.1159
6.7275
7.4002
8.1403
18
1.0939 1.1961 1.3073 1.4282
2.6215
2.7656
2.9178
3.0782
3.2475
3.4262
3.6146
19
1.0994 1.2081 1.3270 1.4568
1.5987
1.6386
1.6796
2.3079
2.4117
2.5202
2.6337
2.7522
3.0256
3.2071
3.3996
3.6035
20
1.1049 1.2202 1.3469 1.4859
1,9898
2.1911
21
1.1104 1.2324 1.3671 1.5157
2.2788
4.5664
4.9089
5.2771
5.6729
6.0983
6.5557
7.0474
7.5759
8.1441
8.7550
9.4116
1.1160 1.2447 1.3876 1.5460
1.1216 1.2572 1.4084 1.5769
1.1272 1.2697 1.4295 1.6084
2.1315
2.9253
3.0715
22
1.7216
2.3699
4.4304
4.7405
5.0724
5.4274
5.8074
6.2139
6.6488
7.1143
7.6123
8.1451
8.7153
5.8715
6.3412
6.8485
7.2579
7.9111
8.6231
9.3992
10.2451
11.1671
23
2.4647
3.8197
8.0635
8.8296
9.6684
10.5869
11,5926
12,6939
13.8998
15.2203
16.6662
18.2495
8.9543
9.8497
10.8347
2.2833
2.8760
3.0054
3.1407
3.2820
3.4297
3.5840
3.7453
3.9139
4.0489
4.5331
4.8277
5.1415
5.4757
5.8316
6.2107
24
2.5633
3.2251
1.1328 1.2824 1.4509 1.6406
2.6658
3.3864
3,5557
3.7335
3.9201
7.6868
8.3401
9.0490
9.8182
10.6528
25
3.8134
4,0231
4.2919
4.5494
4.8223
5.1117
5.4184
5.7435
6.0881
6.4534
1.1385 1.2953 1.4727 1.6734
11.9182
13.1100
14.4210
15.8631
17.4494
2.4460
2.5316
26
2.7725
2,8834
2.9987
3.1187
7.3964
7.9881
8.6271
9.3173
10.0627
10.8677
11.7371
27
1.1442 1.3082 1.4948 1.7069
2,2213
1.9965 2.2879 2.6202
2.0464 2.3566 2.7119
1.9478
4.2444
28
1.1499 1.3213 1.5172 1.7410
4.4778
1.1556 1.3345 1.5400 1.7758
4.7241
4,9840
5.2581
5.5473
29
4,1161
4.3219
4,5380
4,7649
12.1722
2.0976
6.6144
7.0443
7.5022
7.9898
30
1.1614 1.3478 1.5631 1.8114
2.4273
2.8068
2.9050
3.2434
3.3731
11.5583
12.5407
13.2677
31
1.1672 1.3613 1.5865 1.8476
2.1500
2.2038
2,5001
14.4618
19.1943
1.1730 1.3749 1.6103 1.8845
3.0067
3.1119
21.1138
23.2252
2.5751
2.6523
2.3153 2.7319
2.3732 2.8139 3.3336
2.8983
32
3.5081
4.0900
10.1174
13.6067
15.7633
1.1789 1.3887 1.6345 1.9222
4.2740
4.4664
3.6484
5.8524
6.1742
9.3253
9.9781
10.6766
19.9832
21.8816
33
2.2589
5.0032
6.8406
7.2510
10.8763
11.6920
12.5689
13.5115
14.5249
15.6143
16.7853
12.6760
14.7632
16.0181
17.3796
18.8569
17.1820
34
1.1848 1.4026 1.6590 1.9607
3,2209
3.7943
5.2533
8.5092
13.6901
18.7284
25.5477
35
1.1907 1.4166 1.6839 1.9999
3.9461
4.6673
5.5160
6,5138
7.6861
9.0623
14.7853
20.4140
23.9604
28.1024
1.1967 1.4308 1.7091 2.0399
15.9682
17,2456
18.6253
4.8774
11.4239
12.2236
13.0793
30.9127
34.0039
37.4043
41.1448
45.2593
36
2.4325
2.4933
3.4503
3.5710
3.6960
3.8254
3.2620 3.9593
4.1039
5.7918
6.0814
6.3855
6.7048
7.0400
7.3920
6.8721
7.2501
7.6488
8.0695
8.5133
8.9815
8.1473
8.6361
9.1543
9.7035
10.2857
9.6513
10.2786
10.9467
22.2512
24.2538
26.4367
28.8160
26.2366
1.2027 1.4451 1.7348 2.0807
20.4597
22.1988
24.0857
26.1330
28.3543
37
2.9852
28.7291
4.2681
4.4388
4.6164
4,8010 5.8164
5.0969
38
1.2087 1.4595 1.7608 2.1223 2.5557
3.0748
5.3262
31.4584
1.2147 1.4741 1.7872 2.1647
1.2208 1.4889 1.8140 2.2080 2.6851
1.2269 1.5038 1.8412 2.2522 2.7522 3.3599 4.0978
1.2330 1.5188 1.8688 2.2972
1.2392 1.5340 1.8969 2.3432
1.2454 1.5493 1.9253 2.3901
5.5659
34.4469
37.7194
41.3027
39
2.6196
3.1670
11.6583
13.9948
20.1153
40
12.4161
14.9745
18.0442
21.7245
31.4094
6.0781
13.2231
16.0227
17.1443
18.3444
19.6285
41
4.9931
10.9029
19.3976
23.4625
34.2363
49.7852
2.8210 3.4607
2.8915 3.5645
2.9638 3.6715
3.0379 3.7816
42
4.2413
5.1928
6.3516
5.4005 6.6374
6.9361
7.2482
7.5744
7.7616
9.4755
11.5570
14.0826
20.8524
25.3395
30.7644
37.3175
45.2265
54.7637
43
40.6761
4.3897
4.5433
4.7024
8.1497
8.5572
8.9850
9.4343
9.9060
9.9967
12.2505
27.3666
33.3794
36.2167
39.2951
14.9980
22.4163
49.5230
60.2401
44
5.6165
10.5465
12.9855
15.9729
24.0975
29,5560
44.3370
54,2277
66.2641
72.8905
1.2516 1.5648 1.9542 2.4379
17.0111
18.1168
19.2944
45
5.8412
6.0748
11,1266
11.7385
12,3841
13.0653
13.7646
14.5905
15.4659
16.3939
17.3775 21.8842
21.0025
25.9048
27.8477
31.9204
48.3273
52.6767
59.3793
1.2579 1.5805 1.9835 2.4866
1.2642 1.5963 2.0133 2.5363
1.2705 1.6122 2.0435 2.5871
46
3.1139
3.1917
3.2715
3.3533
3.8950
4.0119
4.1323
4.8669
22.4726
34.4741
42.6352
46.2592
50.1912
54.4574
65.0204
5.0373
5.2136
5.3961
6.3178
6.5705
6.8333
7.1067
29.9363
32.1815
34.5951
37.2320
40.2106
80.1795
88.1975
97.0172
47
7.9153
24.0457
25.7289
57.4176
71.1973
77.9611
85.3674
93.4773
8.2715
48
1.2768 1.6283 2.0741 2.6388
1.2832 1.6446 2.1052 2.6916 3.4371 4.3839
10.4013
20.5485
62.5852
49
4.2562
8.6437
10.9213
13.7838
27.5299
43.4274
68.2179
106.7190
50
5.5849
9.0326
11.4674 14.5420
18.4202
23.3067
29.4570
37.1897
46.9016
59.0863
74.3575
117.3909
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