Problem 2. On January 1, 1995, an investor opened a savings account at Bank Awith a deposit of $3,000 earning simple interest at an annual rate of 5.0%. At the endof business on December 31, 2003 the investor closed the account and invested theaccumulated amount in a savings account at Bank B earning 7.0% annual effectiverate of interest on a compound interest basis.(1)What should the balance be in the investor's savings account on De-cember 31, 2009?(2)On January 1, 2020, the investor receives a letter from Bank B statingthat an internal audit has discovered that interest was overcredited by 1% during theyear ending December 31, 2006 and undercredited by 1% during December 31, 2009.¹Based on this information, what should be the balance be in the investor's savingsaccount on December 31, 2009?

The simple interest is the interest earned on the same amount for each successive period. Compound…

Answered: Problem 2. On January 1, 1995, an…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 15E

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A customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer was able to negotiate with the company and transferred the accounts receivable into a note that includes interest, along with an up-front cash payment of $6,000. The note maturity date is 24 months with a 15% annual interest rate. What is the entry to recognize this transfer?
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.
A ski company takes out a $400,000 loan from a bank. The bank requires eight equal repayments of the loan principal, paid annually. Assume no interest is paid or accumulated on the loan until the final repayment. How much of the loan principal is considered a current portion of a noncurrent note payable in year 3? A. $50,000 B. $150,000 C. $100,000 D. $250,000
An individual makes five annual deposits of P 2,000 in a savings account that pays interest at a rate of 4% per year. One year after making the last deposit, the interest rate changes to 6% per year. Five years after the last deposit the accumulated money is withdrawn from the account. How much is withdrawn? Select one: a. P 16,701 b. P 12,356 c. P 15,824 d. P 14,223**please do not use excel
A customer has a balance of $4,000 to be invested in a savings account with 5% interest per year. A. Calculate the Future Value in the account in the 2nd year, 6th year and 10th year? B. From the results found in question A, calculate the amount of interest earned on: first two years (years 1 to 2)the next four years (years 3 to 6)past four years (years 7 to 10) C. From the results obtained in question B, why does the amount of interest earned increase in each subsequent period?
Question 1 and 2 1. Carlota Corp. deposits P12,000 at the end of each year for the next 4 consecutive years in a bank paying 8% interest compounded annually. No future deposits or withdrawals are made. What will be the value of the account at the end? 2. Abby Corp. deposits P20,000 at the end of each year for the next 4 consecutive years in a bank paying 8% interest compounded annually. No future deposits or withdrawals are made. What will be the value of the account at the end?
Bank A pays 2% interest compoundedannually on deposits, while Bank B pays 1.75% compounded daily.a. Based on the EAR (or EFF%), which bank 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.
On may 1 Cleveland livingston opened a savings account that paid 3.5 percent exact interest at fulton savings bank with a deposit of 5,000. Ten days later he deposited 2,000. Fourteen days later he deposited 8,000. No other deposits or withdrawals were made. Six days later the bank calculated the daily interest.
NOTE: PLEASE STRICTLY CHOOSE FROM THE FORMULA ATTACHED. DONT USE EXCEL! 8. Mrs. Dimayuga deposits P12,000 in a savings account on March 30, 2006. Six months later, she deposited P6,000. If the bank credits at 12% compounded quarterly and no withdrawal has been made, how much is her money on December 30, 2012? 9. Mrs. Delos santos has P75,000. 1/3 of it was invested at 18% compounded semi-annually. 1/4 of the remaining amount was invested at 12% compounded quarterly, and the remaining amount was invested at 12% compounded monthly. Find her total investment in 6 years. 10. Find the compound amount and interest of P29,700 invested for 6 years and 9 months at 18% compounded monthly.
Find the new balance, assuming that the bank charges 1 1/2 % per month on the unpaid balance. PreviousBalance Payment NewPurchases $500 $40 $80 STEP 1: Find the unpaid balance after the payment is made on the previous balance.$ STEP 2: Calculate the amount of charge incurred by the unpaid balance.$ STEP 3: Find the new balance.$
Assuming loan made by M Enterprises to Banco De Oro amounting to P350,000.00 payable in three years with a monthly interest of 1.05%. M enterprises issued 12 checks for 1 year and upon 3rd month, issued check was bounced. What could be the possible action of the drawee? Elaborate your answer with supporting data. What could be the possible violation of the above scenario where they would just escape the obligation to the said bank upon the rules of commercial/ personal credit?
Assuming loan made by M Enterprises to Banco De Oro amounting to P350,000.00 payable in three years with monthly interest of 1.05%. M enterprises issued 12 checks for 1 year and upon 3rd month, issued check was bounced. What could be the possible violation on the above scenario where they would just escape the obligation to the said bank upon the rules of commercial/personal credit?

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