The First National Bank is offering a 3 year certificate of deposit (CD) at 4% interest compounded quarterly; Second National Bank is offering a 3 year CD at 5% interest compounded annually. (Round your answers to two decimal places.) (a) If you were interested in investing $7,000 in one of these CDs, calculate the compound amount (in $) of each offer. (Use Table 11-1.) First National Bank: Second National Bank: (b) What is the annual percentage yield of each CD? First National Bank Second National Bank (c) If Third National Bank has a 3 year CD at 4.5% interest compounded monthly, use the compound interest formula to calculate the compound amount (in $) of this offer.

The First National Bank is offering a 3 year certificate of deposit (CD) at 4% interest compounded quarterly; Second National Bank is offering a 3 year CD at 5% interest compounded annually. (Round your answers to two decimal places.) (a) If you were interested in investing $7,000 in one of these CDs, calculate the compound amount (in $) of each offer. (Use Table 11-1.) First National Bank: Second National Bank: (b) What is the annual percentage yield of each CD? First National Bank Second National Bank (c) If Third National Bank has a 3 year CD at 4.5% interest compounded monthly, use the compound interest formula to calculate the compound amount (in $) of this offer.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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(a)

If you were interested in investing $7,000 in one of these CDs, calculate the compound amount (in $) of each offer. (Use Table 11-1.)

First National Bank:

Second National Bank:

(b)

What is the annual percentage yield of each CD?

First National Bank

Second National Bank

(c)

If Third National Bank has a 3 year CD at 4.5% interest compounded monthly, use the compound interest formula to calculate the compound amount (in $) of this offer.

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