Natalia makes a deposit of $2,000 into a savings account at the end of the 1st year and another one in the same amount at the end of the 3rd year. Manuel makes a deposit of $2,000 at the end of the 2nd year and another one in the same amount at the end of the 4th year. The effective annual interest rate on both investments is 10%. Determine by how much the accumulated amount in Natalia's account exceeds the accumulated amount in Manuel's account at the end of 5 years right after interests have been applied.

Natalia makes a deposit of $2,000 into a savings account at the end of the 1st year and another one in the same amount at the end of the 3rd year. Manuel makes a deposit of $2,000 at the end of the 2nd year and another one in the same amount at the end of the 4th year. The effective annual interest rate on both investments is 10%. Determine by how much the accumulated amount in Natalia's account exceeds the accumulated amount in Manuel's account at the end of 5 years right after interests have been applied.

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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Amy has an account that earns interest at a 10% annual effective rate of interest. She plans to make a level deposit at the beginning of each of the next 18 years so that her balance at the end of the 18 years will be $24000. What is the value of the required level deposit?
Gilberto opened a savings account for his daughter and deposited $1000 on the day she was born. Each year on her birthday, he deposited another $1000. If the account pays 11% interest, compounded annually, how much is in the account at the end of the day on her 12th birthday? At the end of the day on her 12th birthday, the amount in the account is $ (Simplify your answer. Type an integer or a decimal. Round to the nearest cent if needed.)
Lisa deposits $80,000 into an account that pays 6% interest per year, compounded annually. Scott deposits $80,000 into an account and also pays 6% per year, but it is simple interest. find the interest Lisa and Scott earn during each of the first three years. Then decide who earns more interest each year. Assume there are no withdrawals and no additional deposits.
If Bob and Judy combine their savings of $1,500 and $900, respectively, and deposit this amount into an account that pays 7 % annual interest, compounded monthly, what will the account balance be after 7 years?
Heather deposited $1, 700 at her local credit union in a savings account at the rate of 9.8% paid as simple interest. She will earn interest once a year for the next 13 years. If she were to make no additional deposits or withdrawals, how much money would the credit union owe Heather in 13 years?
An investor deposits $100 into his credit union account that pays interest at the rate of 3.25% per year (payable at the end of each year). He leaves the money and all accrued interest in the account for 7 years. How much will he have at the end of the 7 years?
Stacey deposits $ 4500 at the end of each year for 30 years into an investment fund which pays out interests at annual effective interest rate of 3 %. He is only able to reinvest this interest at an annual effective interest rate of 2 %. What is the accumulated value of his investments at the time of the last investment. Explain your work.
Bob has deposited $10,000 at the end of each year into a saving account for the last 12 years. His deposits earned interest at 4% for the first 4 years; at 5% for the next 3 years; and at 6% for the last 5 years. (a) What is the accumulated value in his saving account at the end of year 4? (b) What is the accumulated value in his saving account at the end of year 7? (c) What is the accumulated value in his saving account at the end of year 12? (d) What is the total interest earned for the 12 years?
If Jackson deposits 100 dollars at the beginning of each month in a savings account earning interest at the rate of 8%/year compounded monthly, how much will he have on deposit in his savings account at the end of 6 yr, assuming that he makes no withdraws during that period?
A woman deposits $260 of her quarterly check into an annuity for the education of her child. She does this at the end of each quarter for 4 years into an account paying 6% per year, compounded quarterly. Find the amount of the annuity and the interest earned.
Mike is planning to take a Caribbean vacation in two years. In order to save money for the trip, he invests his $1200 tax refund. a. Bank 1 offers simple interest of 8 %. At the end of the two years of investment, how much will Mike have in his savings account if he chooses Bank 1? b. Bank 2 offers 3.5% compounded quarterly. At the end of the two years of investment, how much will Mike have in his savings account if he chooses Bank 2? c. If the trip costs $1,350. Is Mike going to be able to accomplish his goal? Which bank should he choose? Explain why.
Interest Earned. On June 1, Mia deposited $5,600 in an MMDA that pays 3% interest. On October 31, Mia invested $1,200 in a three-month CD that pays 4%. At the end of the year, how much interest will Mia have earned, assuming she hasn't taken anything out of the money market deposit account? Assuming she hasn't taken anything out of the money market deposit account, the amount of interest Mia will have earned is (Round to the nearest cent.).

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