One bank advertises an interest rate on a certificate of deposit (CD) to be 4 % compounded daily. Another bank advertises a CD with a 4.1% effective annual rate. The principal deposited is $ 1000 for this problem. At 4% compounded daily: F4= At a 4.1% effective annual rate: F4= In which CD would you earn the most money in 4 years? CD with given effective interest rate CD compounded daily at given interest rate

One bank advertises an interest rate on a certificate of deposit (CD) to be 4 % compounded daily. Another bank advertises a CD with a 4.1% effective annual rate. The principal deposited is $ 1000 for this problem. At 4% compounded daily: F4= At a 4.1% effective annual rate: F4= In which CD would you earn the most money in 4 years? CD with given effective interest rate CD compounded daily at given interest rate

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Consider a uniform series of cash flows. The first cash flow of $10,000 occurs at time 10 and the…

A: A cash flow is the movement of funds over a predetermined time period into or out of the financial…

Q: Choose the equation below that can be used to determine the value of "P" for a known interest rate,…

A: Present value refers to the value right now of some amount of money in the future. For instance, if…

Q: If you borrow $4,000, what single payment must you make after 5 years to repay the principal and…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: The monthly average cable TV bill in 2017 is $81.61. If cable costs are climbing at an annual rate…

A: Monthly average in 2017 = $81.61Increase in annual rate (r) = 7% per yearn= 2021 - 2017 = 4 years

Q: What is the amount of the quarterly deposits A such that you will be able to withdraw the amounts…

A: Given that there are withdraws of $1000 in the fourth period and $2800 in the eighth period.…

Q: What single amount at the end of the fifth year is equivalent to a uniform annual series of $3,000…

A: The present value represents the current monetary worth of a future sum, factored in by applying a…

Q: You deposit $5000 each year into an account earning 8% interest compounded annually. How much will…

A: Uniform annual deposit (A) = $5000The interest rate on the deposits is 8% compounded annually. So i=…

Q: How much should you invest each month in order to have $700,000 if your rate of return is 3.6%…

A: A higher discount rate indicates a lower present value of the annuity while a lower discount rate…

Q: A department store has offered you a credit card that charges interest at 1.53% per month,…

A: Nominal interest rate and the effective annual rate are calculated as follows:-

Q: You want to borrow $25,253. You must repay the loan in 14 years in equal monthly payments and a…

A: To solve this problem, we can use the formula for calculating the monthly payment on a loan with…

Q: a) What is the future value of a series of payments of $6,000 each, at the end of 8 years, at 6%…

A: Ordinary annuity is the equal series of payment is made at constant interval at the end of each…

Q: Suppose you borrowed $10, 000 at an interest rate of 12% compounded monthly over 48 months. At the…

A: Loan amount (P)=$10,000 Rate of interest =12% compounded monthly This loan is a fixed payment loan…

Q: Find i (the rate per period) and n (the number of periods) for the following loan at the given…

A: Given: Annual interest rate = 7% Interest is compounded semi-annually. Hence, i (rate per period) =…

Q: Find the periodic payments PMT necessary to accumulate the given amount in an annuity account.…

A: We are required to accumulate an amount of $80,000, therefore, this amount is the future value. FV =…

Q: fast urgent.

A: The objective of the question is to verify if the given monthly payments of $234.85 are correct for…

Question

One bank advertises an interest rate on a certificate of deposit (CD) to be 4 % compounded daily. Another
bank advertises a CD with a 4.1% effective annual rate. The principal deposited is $ 1000 for this problem.
At 4% compounded daily: F4=
At a 4.1% effective annual rate: F4 =
In which CD would you earn the most money in 4 years?
CD with given effective interest rate
O CD compounded daily at given interest rate

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Lindsey plans to deposit her annual bonus into a savings account that pays 3% interest compounded annually. The size of her bonus increases by $1000 each year, and the initial bonus amount she will deposit at the end of year 1 is $2,500. a) Determine how much will be in the account immediately after the 6th deposit. b) What's the future value if she only plans to deposit her annual bonus for 8 years (the last deposit is at the end of year 8)? c) What's the future value if she only plans to deposit her annual bonus for 8 years (the last deposit is at the end of year 8), but also plans to skip the deposits at the end of years 3 and 6?
Q 6 please
Answer was not A or D
A geometric gradient that increases at f= 5% per year for 15 years is shown in the accompanying diagram. The annual interest rate is 10%. What is the present equivalent value of this gradient? AClick the icon to view the diagram for geometric gradient values. Click the icon to view the interest and annuity table for discrete compounding when i= 5 % per year. Click the icon to view the interest and annuity table for discrete compounding when i= 10% per year. 4... The present equivalent value of the gradient is $ (Round to the nearest dollar.)
You borrowed $10,000 from a local bank, with the agreement that you will pay back the loan according to a graduated payment plan. If your first payment is set at $1,500, what would the remaining payment look like at a borrowing rate of 7% over five years? (the value of G approximately is...) $10,000 0 $1.500 20 30 4G
19. How much money should be invested monthly at 6% per year, compounded monthly, in order to have $10,000 in two years?
Using the formula, not the table
Please solve complete in hand written
Compare the interest earned by $10,000 for three years at 9% simple interest with interest earned by the same amount for three years at 9% compounded annually. Why does a difference occur? Click the icon to view the interest and annuity table for discrete compounding when i=9% per year. The simple interest earned is (Round to the nearest dollar.) (Round to the nearest dollar.) The compound interest earned is $ There is a difference in the amount of interest earned because compound interest allows interest from previous years to earn additional interest, whereas simple interest only considers the original principal.
4.39. What is the present worth of the following series of payments? (a) $5,000 at the end of each six-month period for 12 years at 9% compounded semiannually. $7,000 at the end of each quarter for 10 years at 8% compounded quarterly. (b) (c) $3,500 at the end of each month for five years at 6% compounded monthly.