Question: Local banks are all offering 6% compounded monthly on five year Certificates of Deposit. Hanover Bank has offered continuous compounding at the same rate on

Local banks are all offering 6% compounded monthly on five year Certificates of Deposit. Hanover Bank has offered continuous at the same rate on new CDs hoping to attract additional customers. Sharon Shaker has just received a $50,000 royalty check for a romance novel she wrote last year. She has no immediate need for the money and intends to deposit it for about 5 years at the best interest rate she can get. How much more interest will her deposit earn at Hanover than at another bank?

Step by Step Solution

★★★★★

3.39 Rating (161 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

At another bank the value of Sharons 50000 after five years will be FV PV FVF kn k 6 1... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

465-B-F-F-M (6295).docx

120 KBs Word File

Students Have Also Explored These Related Finance Questions!

How much more interest will be earned if $5000 is invested for 6 years at 7% compounded continuously, instead of at 7% compounded quarterly?

How much more output will the average American have next year if the $18 trillion U.S. economy grows by (a) 2 percent? (b) 5 percent? (c) 1.0 percent? Assume a population of 320 million.

Nick Thomas has been considering some of the issues identified in Case 3.2. He is considering different directions to take. First, he is a little concerned that most of the information on which...

32.Local banks are all offering 6% compounded monthly on five year Certificates of Deposit.Hanover Bank has offered continuous compounding at the same rate on new CDs hoping to attract additional...

1. You have $11,375 to invest today and anticipate you can add to this investment $280 per year for 17 years. You expect to earn 5 5/8%. The future value of this investment is closest to: A)...

16. Application of Time Value of Money Skills Nick Nohitter has been playing baseball since he was five years old and has always dreamed of playing in the big leagues. Last season, he was a starting...

P L E A E A N S W E R T H E F O L LO W I N G M AT H Q U E S T I O N S . QUESTION 1 1. Find the simple interest on a $400 investment made for 5 years at an interest rate of 7%/year. What is the...

Chapter 7:7.2 #2 (p. 168) Chapter 8:8.2 #3 (p. 205) Chapter 9:9.2 #1 (p. 225) a., b., and c. (for c., only answer the adjustable rate mortgage part Chapter 7 from Personal Finance was adapted by The...

i need some one toanswering these three questions. make sure to include apa format for the information pretty straight forward. Attached below are the chapters. Chapter 7: 7.2 #2 (p. 168) Chapter 8:...

Good Morning Dr.Ramsey Please assist me with my discussion this week ( min 150 words). Advanced Time Value of Money An advertised monthly lending rate of 0.9% is about 11% per year. This difference...

Explain the arrangements and workings of the European Monetary System (EMS).

On Jan 1, 2004, Haden company [ lessor] entered into a non-cancelable cancelable lease agreement with Sandy company[ lessee] for machinery was carried on the accounting records of Haden at $4,530,000...

1. Use the Penn World Table, accessible at http://febpwt.webhosting.rug.nl/Dmn/AggregateXs/ VariableCodeSelect, to study comovements between the components of GDP and real GDP. Pick any economy and...

In a manufacturing project, you have requested bids to procure stainless steel products. But, your sponsor insists you to conduct bidder conferences before selecting sellers. What mandatory standard...

Briefly describe the debt/interest planning problem and the approach that leads to its solution

How are planning assumptions reflected in projected financial statements? Is there a standard computational procedure for incorporating assumptions into planned numbers? Whats the difference between...

Comment on the value of the formula (EFR) approach to estimating funding requirements. Could it create more problems than it solves?

The price of a stock evolves as in the following two-steps binomial tree: Let X be a European call option with maturity at tick-time 2 and strike price 108. Assume that the interest rate r and time...

Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are shown below. MARR is 8%/year. What is the capital recovery cost of Model 334A? $ Chapter 07,...

* Suppose commute times in a large city are normally distributed and that 66.60% of commuters in this city take more than 20 minutes to commute one way. If the standard deviation of such commutes is...