Mountain Grains Cooperative wants to invest $42,000 in a short-term deposit. The bank offers 1.4% interest for a one-year term and 1.3% for a six-month term. (a) How much would Mountain Grainsreceive if the $42,000 is invested for one year?
Mountain Grains Cooperative wants to invest $42,000 in a short-term deposit. The bank offers 1.4% interest for a one-year term and 1.3% for a six-month term. (a) How much would Mountain Grainsreceive if the $42,000 is invested for one year?
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
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Mountain Grains Cooperative wants to invest $42,000 in a short-term deposit. The bank offers 1.4% interest for a one-year term and 1.3% for a six-month term.
(a) How much would Mountain Grainsreceive if the $42,000 is invested for one year?
(b) How much would Mountain Grains receive at the end of one year if the
$42,000 is invested for six months and then the principal and interest earned is reinvested for another six months?
(c) What would the one-year rate have to be to yield the same amount of interest as the investment described in part (b)?
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