Suppose you save K85,000 with a commercial bank that offers an interest rate of 7% per annum

Fantastic news! We've Found the answer you've been seeking!

Question:

Suppose you save K85,000 with a commercial bank that offers an interest rate of 7% per annum and charges a marginal tax rate of 20%.

(a) How much would you receive at the end of 3 years? [4 marks]

(b) What would be the real interest rate that you get?

Related Book For answer-question

Fundamentals of Corporate Finance

ISBN: 978-0132148238

2nd edition

Authors: Berk, DeMarzo, Harford

See More Books

Posted Date: Dec 30, 2022 01:02 AM

See More Questions

Suppose Big Bank offers an interest rate of 5.5% on both savings and loans, and Bank Enn offers an interest rate of 6% on both savings and loans. a. What profit opportunity is available? b. Which...
A $10 million, 5-year loan bears an interest rate of 7 percent. The loan repayment plan calls for five annual end-of-year payments. Each payment is to include an equal amount of principal repayment...
For a Federal Credit Union that offers an interest rate of 8% per year, compounded quarterly, determine the nominal rate per 6 months.
The Litzenberger Company has projected the following quarterly sales amounts for the coming year: a. Accounts receivable at the beginning of the year are $310. Litzenberger has a 45-day collection...
What are some of the control concerns associated with wireless technology?
The variable name VALUE in the file (canadaemplmntdata) provides quarterly Canada employment data (in thousands).With statistical software assistance, a) Fit a HoltWinters model after subsetting the...
In a BBC documentary called Power to the People, Michael Portillo visited a You Decide session organized by the local council in Tower Hamlets, London. At this session, local people decide what is to...
Ronald Sadler, a California resident, owned a helicopter distribution company in West Germany, Delta Avia. This company distributed U.S.-made Hughes civilian helicopters in western Europe. Sadlers...
The clinic s COO asks you to create a budgeted income statement ( also called a profit and loss statement ) for the clinic for the upcoming fiscal year. She has asked an intern to create a volume...
Darcelle teaches skiing at the Snow School. Jack runs a ski shop called Up Hill, Down Hill. Their combined bank interest is $1,000. If they get a refund, they would like the money deposited into...
A 97 kg man lying on a surface of negligible friction shoves a 72 g stone away from himself, giving it a speed of 5.0 m/s. What speed does the man acquire as a result?
The following transactions took place during 2018 at Diamond Company. Prepare the adjusting journal entries for the year ended December 31, 2018. Transaction Details 1. Diamond has 10 employees who...
__________schizophrenia is characterized by symptoms that are sudden and of easily identifiable onset; __________schizophrenia develops gradually over a persons life span.
Which of the following is a strong argument against the medical perspective on abnormality? a. Physiological abnormalities are almost always impossible to identify. b. There is no conclusive way to...
The separation of the personality, which provides escape from stressful situations, is the key factor in __________disorders.
If money doesnt buy happiness, what can you do to make yourself happier? As you answer, consider the research findings on stress and coping, as well as on emotions.
The interest rate is 10% on the dollar and 2% on the yen. Also, the current spot rate is $1 =#120 and the one-year forward rate is $1 =$115. Is there an opportunity for covered interest arbitrage? If...
l ask this second time correnct answer is 38,01 can we look pls Consider a non-conducting rod of length 8.8 m having a uniform charge density 4.5 nC/m. Find the electric potential at P, a...
Gillette Corporation will pay an annual dividend of $0.65 one year from now. Analysts expect this dividend to grow at 12% per year thereafter until the fifth year. After then, growth will level off...
Castle View Games would like to invest in a division to develop software for video games. To evaluate this decision, the firm first attempts to project the working capital needs for this operation....
The Saban Corporation is trying to decide whether to switch to a bank that will accommodate electronic funds transfers from Sabans customers. Sabans financial manager believes the new system would...
Division A has been offered a project costing $\$ 100,000$ and giving annual returns of $\$ 20,000$. Division $B$ has been offered a project costing $\$ 100,000$ and giving annual returns of $\$...
The manager of the 'D' Division is considering investing in a replacement machine at the beginning of next year, 2020. If the investment does not go ahead, then the divisional results for '...
An investment centre has net assets of $\$ 800,000$, and made profits before interest of $\$ 160,000$. The notional cost of capital is $12 \%$. This is the companys target return. An opportunity has...

Suppose you save K85,000 with a commercial bank that offers an interest rate of 7% per annum

Question:

Expert Answer:

The detailed ... View the full answer

Fundamentals of Corporate Finance

Students also viewed these economics questions