he First National Bank is offering a 4 year certificate of deposit (CD) at 4% interest compounded quarterly; Second National Bank is offering a 4 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 4 year CD at 4.5% interest compounded monthly, use the compound interest formula to calculate the compound amount (in $) of this offer.
he First National Bank is offering a 4 year certificate of deposit (CD) at 4% interest compounded quarterly; Second National Bank is offering a 4 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 4 year CD at 4.5% interest compounded monthly, use the compound interest formula to calculate the compound amount (in $) of this offer.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
The First National Bank is offering a 4 year certificate of deposit (CD) at 4% interest compounded quarterly; Second National Bank is offering a 4 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 4 year CD at 4.5% interest compounded monthly, use the compound interest formula to calculate the compound amount (in $) of this offer.
$
Transcribed Image Text:TABLE 11-1 Compound Interest Table (Future Value of $1 at Compound Interest)
Periods
1%
2%
3%
4%
5%
6%
7%
8%
Periods
1.
1.02000
1.04040
1,03000,
1.06090
104000
1.08160
1.05000
1.10250
1.06000)
1,12360
1.07000
1.14490
1.08000
1.16640
1.00500
1.01003
1.01508
102015
1,02525
101000
102010
1.03050
1.04060
1.05101
101500
1.03023
1,04568
1.06136
1.07728
1.
2.
2
1.06121
108243
1.10408
1.09273
L.12551
1.15927
12486
1,16986
1.21665
1.15763
1.21551
1,27628
1.25971
1.36049
1:46933
3.
1.26248
1.33823
131080
1.40255
1.12616
1.14869
1.17166
L19509
121899
1.26532
பஅ593
1.36857
1.34010
1.40710
1.47746
1.55133
1.62889
150073
1.60578
1.71819
1.58687
1.71382,
1.41852
1.03038
1.03553
1.04071
1.06152
1.07214
1.09344
1.10984
1.12649
9.
1.22987
1.26677
1.30477
1.34392
1.50363
1.08286
1.85093
1.42331
1.48024
1.68948
1.79085
1.83846
1.99900
1.09369
1.10462
6.
1.04591
1,05114
1.16054
1.96715
2.15892
10
1.53945
1.60103
1.66507
1.73168
1,80094
2.10485
2.25219
2.40985
2.57853
உாக்ரொ
1.71034
1.79586
1.17795
1LI0Sర2ి)
121355
1.23176
1.25023
124337
1.26824
129361
131948
1.38423
1.42576
1.46853
1,51259
1.55797
2.33164
2.51817
2.71962
11
12
1.05640
1.06168
1.11567
1.12683
2.01220
12.
13
14
1.06699
1.07232
1.07768
1,13809
1.14947
1.88565
1.97993
2.13293
2.26090
13.
14
15
15
1.16097
134587
2.07893
2,39656
3,17217
1,08307
1.08849
1.26899
1.87298
194790
2.02582
2.10685
2.18287
2.29202
2.54035
2.69277
2.85434
3.02560)
3.20714
16
1.17258
137279
140024
142825
1.45681
1.48595 1.80611
1.60471
16
17
1.18430
1.
3.15882
3.70002
1.65285
1.70243
17
1.09393
1,09940
18
1.19615
1.30734
2.40662
18
19
1.32695
1.34686
2.52695)
2.65330
3.61653
3.86968
4.31570
4.66096
19
20
20
1.10490
1.22019
2,19112
1.11042
1.11597
1.12155
1.12716
1.23239
1,24472
21
1.36706
151567
1.86029
154598
1.91610
157690 1.97359
2.27877
2.36992
2.46472,
2.56330
3.39956
4.14056
4.43040
4.74053
5.03383
5.43654
5.87146
2.78596
21
22
1.38756
3.60354
3.81975
2.92526
22
23
1.25716
1.40838
3,07152,
3.22510
3.38635
23
24
25
1.26973
1.28243
1.42950
1.45095
1.60844
2.03279
2.09378
3.07237
6.34118
24
1.13280
1.64061
2.66584
4.29187
5.42743
6.84848
25
Periods
9%
10%
11%
12%
13%
1.13000
1.27690
14%
1,14000
1.29960
15%
1.15000
1.32250
1.52088
1.74901
16%
17%
18%
Periods
1.09000
1.18810
1.29503
1.41158
1.11000
1.12000
1.16000
1.34560
1.56090
1.17000
136890
1.60161
1.18000
1.
121000
133100
1,46410
1.23210
1.36763
125440
1.40493
1.44290
148154
1.68896
164303
151807
1.68506
1.57352
1.63047
1.81064
688
1.93878
2.28776
1.53862
1.61051
1.76234
1.84244
1.92541
2.01136
2.10034
2.19245
1.77156
1.94872
2.14359
2.35795
2.59374
9.
1.67710
1.87041
197382
2.21068
2.08195
2.35261
2.19497
2.50227
2.85259
3.25195
3.70722
2.31306
2.66002
3.05902,
3.51788
2.43640
2.82622
3.27841
3.80296
2.56516
2.69955
3.18547
3,75886
4.43545
5.23384
9.
7.
1.82804
2.07616
3.00124
3,51145.
7.
1.99256
2.17189
2.30454
2.55804
2.47596
2.77308
2.65844
3.00404
3.39457
6.
6.
10
2.36736
2.83942
3.10585
4.04556
4.41144
480683
10
11
12
13
14 3.34173 3.79750
15
2.58043
2.81266
3.06580
2.85312
3.13843
3.15176
3.49845
3.47855
3.89598
3.83586
4.33452
4.65239
4,81790 S35025
5.11736
5.9363
11
12
5.62399
6,58007
7.69868
9,00745
10.53872
6.17593
7.28759
8.59936 13
10.14724 14
11.97375
3.45227
3.88328
4.36349
4.88711
5.47357
4.89801
5.53475
6.25427
5.49241
6.26135
6.15279
7.07571
6.88579
7.98752
3.64248
4.17725
4.78459
7.13794
s.13706
9.26552
15
16
17
18
19
20
3.97031
4.59497
5.05447
555992
5.31089
6.13039
6.86604
7.68997
8.61276
9.64629
706733
7.98608
8.13725
9,27646
po.52517
9.35762
10.76126
12.37545
14.23177
(6.36654
10.74800
12.46768
14.46251
16.77652
19.46076
12.33030
14,42646
16.87895
19.74838
23.10560
14.12902
16.67225
19.67325
16
4.32763
4.71712
5.14166
5.60441
17
654355
7.26334
9.02427
10.19742
11.52309
18
19
6.11591
23.21444
6.72750
8.06231
27.39303
20
21
22
6.10881
6.65860
7.25787
2.91108
7.40025
8.14027
8.95430
10.80385
12.10031
13.55238
91626
15.17863
15.66758
Is.82152
21.64475
24,89146
27.03355
31.62925
37,00623
43.29729
32.32378
14.71383
16.62663
26.18640
30.37622
35.23642
21
22
38.14206
23
24
11.02627
20.36158
45.00763
53.10901
23
60888
24
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