The bank has a promotion of either: $100 deposit and earn 35% interest for 3 years...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The bank has a promotion of either: $100 deposit and earn 35% interest for 3 years OR $450 deposit and earn 13% for 1 year 1) Which investment option is the option (ignoring reinvestment after year 1)? Assume a market rate of 10%. 2) Explain when would you be indifferent to either option (ignoring reinvestment after year 1)? The bank has a promotion of either: $100 deposit and earn 35% interest for 3 years OR $450 deposit and earn 13% for 1 year 1) Which investment option is the option (ignoring reinvestment after year 1)? Assume a market rate of 10%. 2) Explain when would you be indifferent to either option (ignoring reinvestment after year 1)?
Expert Answer:
Answer rating: 100% (QA)
To compare the two investment options lets calculate the future value FV of each option after the sp... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
a. Stock market index information: S&P 500 (stock) index level: Nasdaq Composite (stock) index level: b. Interest rate information : Prime rate: Federal funds rate: Commercial paper rate (90 days):...
-
You must decide between two options: buying a home to live in, or continuing to rent. In either case, you are planning to retire in 20 years, convert all your savings and assets to cash, and move to...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
In which section do you create VLAN on Cisco WLC ? ? Layer 3 3 Section Layer 2 2 Section Security Section RF Section
-
A new curve has been developed for a certain type of cement that results in a compressive strength of 5000 kilograms per square centimeter and a standard deviation of 120. To test the hypothesis that...
-
A two-dimensional fluid element of dimensions dx and dy translates and distorts as shown in Fig. P469 during the infinitesimal time period dt = t 2 t 1 . The velocity components at point P at the...
-
The following transactions and events relate to financing cycle transactions: 1. Declare cash dividend on common stock. 2. Issue bonds. 3. Pay bond interest. 4. Purchase 500 shares of treasury stock....
-
The following information is from Harrelson Inc.s, financial statements. Sales (all credit) were $28.50 million for 2013. Sales to total assets1.90 times Total debt to total assets35% Current...
-
A hiker walks 27.0 km from her base camp at 35 south of east. The next day, she walks 41.0 km in a direction 65 north of east and discovers a forest
-
Earnings for several employees for the week ended March 12, 20--, are as follows: Calculate the employer's payroll taxes expense and prepare the journal entry as of March 12, 20--, assuming that FUTA...
-
1. What was Dam Blue Stuff? 2. How did the area get the name Comstock Load? 3. Who invented square formwork? 4. Did the inventor ever get a patient? 5. Who was William Sutro?
-
1. Why is Dollar Tree increasing prices? 2. How will the price change affect Dollar Store's strategy, and how does it compare to what competitors are doing? 3. What do you think the long term impact...
-
The initial speed of a body is 5.99 m/s. What is its speed after 2.05 s if it accelerates uniformly at 4.01 m/s? Answer in units of m/s. Answer in units of m/s. part 2 of 2 What is its speed after...
-
S Dwight Furniture makes desks specially designed for small spaces, such as studio apartments and extended-stay hotels. Each desk sells for $110 (without chair). The cost of each desk follows:...
-
How do Giddens' structuration theory and Bourdieu's concept of habitus provide differing accounts of the relationship between individual agency and social structures, and what implications does this...
-
To what extent does cultural globalization contribute to a homogenization of cultures, and how can sociological theories account for both the resistance to and adaptation of cultural practices in the...
-
MyCo uses the straight-line method. Assets purchased between the 1 st and 15 th of the month are depreciated for the entire month; assets purchased after the 15 th of the month are treated as though...
-
Sheldon and Leonard had a million-dollar idea. In order to make it happen, they have to do special research first. Only Kripke can help them in this matter. But Kripke is known to be the first-class...
-
Carl Conch and Mary Duval are married and file a joint return. They live at 1234 Mallory Sq. Apt. 64, Key West, FL 33040. Carl works for the Key Lime Pie Company and Mary is a homemaker after losing...
-
David and Darlene Jasper have one child, Sam, who is 6 years old. The Jaspers reside at 4639 Honeysuckle Lane, Los Angeles, CA 90248. David's Social Security number is 577-11-3311, Darlene's is...
-
During 2012, William purchases the following capital assets for use in his catering business: New passenger automobile (September 30)........................$21,500 Baking equipment (June 30)...
-
What are the two categories of pattern generality? Explain.
-
Analogy approach makes people end up building templates rather than building patterns. Explain.
-
Explain the concept behind constructing analysis pattern by using stability approach.
Study smarter with the SolutionInn App