Suppose you currently have $2,000 and plan to purchase a 3-year certificate ofdeposit (CD) that pays 4% interest compounded annually. How much will you havewhen the CD matures? How would your answer change if the interest rate were 5% or6% or 20%? ($2,249.73, $2,315.25, $2,382.03, $3,456.00. Hint: With a calculator,enter N 5 3, I/YR 5 4, PV 5 22000, and PMT 5 0; then press FV to get 2,249.73.Enter I /YR 5 5 to override the 4%, and press FV again to get the second answer.In general, you can change one input at a time to see how the output changes.)
Suppose you currently have $2,000 and plan to purchase a 3-year certificate ofdeposit (CD) that pays 4% interest compounded annually. How much will you havewhen the CD matures? How would your answer change if the interest rate were 5% or6% or 20%? ($2,249.73, $2,315.25, $2,382.03, $3,456.00. Hint: With a calculator,enter N 5 3, I/YR 5 4, PV 5 22000, and PMT 5 0; then press FV to get 2,249.73.Enter I /YR 5 5 to override the 4%, and press FV again to get the second answer.In general, you can change one input at a time to see how the output changes.)
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....
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Suppose you currently have $2,000 and plan to purchase a 3-year certificate of
deposit (CD) that pays 4% interest compounded annually. How much will you have
when the CD matures? How would your answer change if the interest rate were 5% or
6% or 20%? ($2,249.73, $2,315.25, $2,382.03, $3,456.00. Hint: With a calculator,
enter N 5 3, I/YR 5 4, PV 5 22000, and PMT 5 0; then press FV to get 2,249.73.
Enter I /YR 5 5 to override the 4%, and press FV again to get the second answer.
In general, you can change one input at a time to see how the output changes.)
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