ont 23) A two-year certificate of deposit pays an annual effective rate of 8.25%. The purcnaser is offered two options for prepayment penalties in the event of early withdrawal: A) A reduction in the rate of interest to 6.25%; B) Loss of three months interest. In order to assist the purchaser in deciding which option to select, compute the ratio of the proceeds under Option A to those under Option B if the certificate of deposit is surrendered: a) At the end of 7 months. ANSWER = b) At the end of 18 months. ANSWER =

ont 23) A two-year certificate of deposit pays an annual effective rate of 8.25%. The purcnaser is offered two options for prepayment penalties in the event of early withdrawal: A) A reduction in the rate of interest to 6.25%; B) Loss of three months interest. In order to assist the purchaser in deciding which option to select, compute the ratio of the proceeds under Option A to those under Option B if the certificate of deposit is surrendered: a) At the end of 7 months. ANSWER = b) At the end of 18 months. ANSWER =

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter5: Introduction To Business Expenses

Section: Chapter Questions

Problem 61P

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