A principal of 10,000 is invested at one of the following banks: a) at 4.75% interest, compounded annually b) at 4.7% interest, compounded semi-annually c) at 4.65% interest, compounded quarterly d) at 4.6% interest, compounded continuously Which is the best bank to lodge the money?

A principal of 10,000 is invested at one of the following banks: a) at 4.75% interest, compounded annually b) at 4.7% interest, compounded semi-annually c) at 4.65% interest, compounded quarterly d) at 4.6% interest, compounded continuously Which is the best bank to lodge the money?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 22PROB

See similar textbooks

Similar questions

EFFECTIVE VERSUS NOMINAL INTEREST RATES Bank A pays 4% interest compounded annually on deposits, while Bank B pays 35% compounded daily. a. Based on the EAR (or EFF%), which hank should you use? b. Could your choice of banks be influenced by the fact that you might want to withdraw your funds during the year as opposed to at the end of the year? Assume that your funds must be left on deposit during an entire compounding period in order to receive any interest.
Mf3. : An entity took UAH 100,000 loan for 5 at 26% of annual interest rate. Interests are paid annually. A bank is using annuity due scheme. Interest revenue for a bank in period 1 is: An entity took UAH 100,000 loan for 5 at 26% of annual interest rate. Interests are paid annually. A bank is using annuity due scheme. Principal, paid in the fourth period, is: Outstanding loan amount is USD 17,000.00. Annuity is USD 4,315.27, interest rate is 18%. The amount of principal, paid in the given period is: Outstanding loan amount is USD 22,000.00. Annual interest rate is 11%. Interest is paid at the end of each year. In the given period bank received USD 4,300.00 of principal payment. The annuity amount is:
1.5. Mr Y invested R2000 in a bank for 7 years. The interest rate was 5% compounded weekly for the first 2 years, for the next 3 years, the interest was calculated at 7% compounded quarterly and for the remaining of the investment, the interest was 8% compounded semi-annually. (5) Nominal and effective interest rate 1.6. If the nominal rate of interest stated is 5% , what would the effective interest rate be if the compounding occurs annually, semi-annually, quarterly, monthly, weekly, and dailydaily.
25. Y deposits P 50,000 in a bank compounded annually at 10% interest, how much is the future value of the principal at the end of year 2?
A bank gives6-month 7.2% interest rate compounded monthly(the interest rate is that the bank applies to a client who deposits hismoney in the bank). This bank provides capital to investors with 22%annual loan interest rate.An investor who receives theloan from this bank wants to invest, expecting 10% annual real profit rate.Annual inflation rate is 14.6%. According to this; a.Determine monthly loan interest rate of the bank b.Find annual real profit rate of the bank c.Calculate the investor's annual compoundeddiscount (profit) rate. d.Calculate the annual realprofit rate of the depositor.
7. RM23,500 was invested in a bank for 3 years 7 months. If the interest rate offered was 9.6% compounded every two months,find the accumulated amount at the end of the investment period.(RM33058.46)
4. A bank has three assets. It has $75 million invested in consumer loans with a three-year duration, $39 million invested in T-bonds with a 15-year duration, and $19 million in six-month maturity T-bills. What is the duration of the bank's asset portfolio in years? A) 3.95 years B) 6.16 years C) 6.50 years D) 7.38 years E) 11.51 years
Company Flora has the following items on its B/S: Money at bank ( no maturity) : USD 52,000 at 1% LT securities (2 years) : USD 135,000 invested at 10% Overdraft from bank (no maturity): USD 17,000 at 4% Equity ( 5 years) : USD 100,000 LT borrowings (2 years): USD 120,000 at 3% Financial assets (5 years): USD 135,000 at 1.5% ST borrowings (8 months): USD 119,000 at 8% Calculate the net interest margin for the company? (total inflows from interest - total outflows from interest) *
Question 1 NewBank started its first day of operations (1 April, 2021) with $6 million in capital. $100 million in checkable deposits is received. The bank issues a $25 million commercial loan and another $25 million in mortgages, with the following terms:  Mortgages: 100 standard 30-year, fixed-rate with a nominal annual rate of 5.25% each for $250,000.  Commercial loan: 3-year loan, simple interest paid monthly at 0.75%/month. If required reserves are 8%, what does the bank balance sheets look like? Ignore any loan loss reserves. Question 2 NewBank decides to invest $45 million in 30-day T-bills. The T-bills are currently trading at $4,986.70 (including commissions) for a $5,000 face value instrument. What does the balance sheet look like? Question 3On the 3rd day of operations (3 April, 2021), deposits fall by $5 million. What does the balance sheet look like? Are there any problems? Question 4 To meet any shortfall in the previous question, NewBank will borrow the cash in the…
Question 1 NewBank started its first day of operations (1 April, 2021) with $6 million in capital. $100 million in checkable deposits is received. The bank issues a $25 million commercial loan and another $25 million in mortgages, with the following terms:  Mortgages: 100 standard 30-year, fixed-rate with a nominal annual rate of 5.25% each for $250,000.  Commercial loan: 3-year loan, simple interest paid monthly at 0.75%/month. If required reserves are 8%, what does the bank balance sheets look like? Ignore any loan loss reserves. Question 2 NewBank decides to invest $45 million in 30-day T-bills. The T-bills are currently trading at $4,986.70 (including commissions) for a $5,000 face value instrument. What does the balance sheet look like? (only ans question2 plz)
Question 1 NewBank started its first day of operations (1 April, 2021) with $6 million in capital. $100 million in checkable deposits is received. The bank issues a $25 million commercial loan and another $25 million in mortgages, with the following terms:  Mortgages: 100 standard 30-year, fixed-rate with a nominal annual rate of 5.25% each for $250,000.  Commercial loan: 3-year loan, simple interest paid monthly at 0.75%/month. If required reserves are 8%, what does the bank balance sheets look like? Ignore any loan loss reserves. Question 2 NewBank decides to invest $45 million in 30-day T-bills. The T-bills are currently trading at $4,986.70 (including commissions) for a $5,000 face value instrument. What does the balance sheet look like? 2 Question 3 On the 3rd day of operations (3 April, 2021), deposits fall by $5 million. What does the balance sheet look like? Are there any problems? Question 4 To meet any shortfall in the previous question, NewBank will borrow the cash in the…
Question 1 NewBank started its first day of operations (1 April, 2021) with $6 million in capital. $100 million in checkable deposits is received. The bank issues a $25 million commercial loan and another $25 million in mortgages, with the following terms:  Mortgages: 100 standard 30-year, fixed-rate with a nominal annual rate of 5.25% each for $250,000.  Commercial loan: 3-year loan, simple interest paid monthly at 0.75%/month. If required reserves are 8%, what does the bank balance sheets look like? Ignore any loan loss reserves. Question 2 NewBank decides to invest $45 million in 30-day T-bills. The T-bills are currently trading at $4,986.70 (including commissions) for a $5,000 face value instrument. What does the balance sheet look like? Question 3 On the 3rd day of operations (3 April, 2021), deposits fall by $5 million. What does the balance sheet look like? Are there any problems? (only ans question3 plz)