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TABLE 4.1 Rates from First Command Bank (2008-2009) CD rates with quarterly compounding 30 Day SI000 - S99.9999) APR APY 321% 325% S100000 + 3.26% 3.30% 90 Day S1000 - S9999.99 APR APY 3.22% 3.25% SI0000 - S99999.99 3.26% 3.30% S100000 + 3.35% 3.40% I Year APR APY SI000 - S9999.99 331% 3.35% SIO000 - S999999.99 3.35% 3.40% S100 000 + 3.55% 3.60% I8 Month APR APY S1000 - 59999.99 3.56% 3.60% SI0000 - S99.999.99 3.59% 3.65% SI00000 2 Year 3.74% 3.80% APR APY S1000 - 59999.99 3.80% 3.85% SIO000 - S99.999.99 384% 3.90% S100 000+ 3.98% 4.05% Some interest and APY calculations. Parts b and e refer to the 2008–2009 rates at First Command Bank shown in Table 4L. a. Assume that a one-year CD for $5000 pays an APR of 8% that is compounded quarterly. How much total interest does it earn? What is the APY? b. If you purchased a one-year CD for $150,000 from First Command Bank, how much interest would you have received at maturity? Was compounding taking place? Explain. e. If you purchased a two-year CD for $150,000 from First Command Bank, the APY (4.05%) was greater than the APR (3.98%) because compounding was taking place. We are not told, however, what the compounding period was. Use the APR to calculate what the APY would be with monthly compounding. How does your answer compare to the APY in the table ?

TABLE 4.1 Rates from First Command Bank (2008-2009) CD rates with quarterly compounding 30 Day SI000 - S99.9999) APR APY 321% 325% S100000 + 3.26% 3.30% 90 Day S1000 - S9999.99 APR APY 3.22% 3.25% SI0000 - S99999.99 3.26% 3.30% S100000 + 3.35% 3.40% I Year APR APY SI000 - S9999.99 331% 3.35% SIO000 - S999999.99 3.35% 3.40% S100 000 + 3.55% 3.60% I8 Month APR APY S1000 - 59999.99 3.56% 3.60% SI0000 - S99.999.99 3.59% 3.65% SI00000 2 Year 3.74% 3.80% APR APY S1000 - 59999.99 3.80% 3.85% SIO000 - S99.999.99 384% 3.90% S100 000+ 3.98% 4.05% Some interest and APY calculations. Parts b and e refer to the 2008–2009 rates at First Command Bank shown in Table 4L. a. Assume that a one-year CD for $5000 pays an APR of 8% that is compounded quarterly. How much total interest does it earn? What is the APY? b. If you purchased a one-year CD for $150,000 from First Command Bank, how much interest would you have received at maturity? Was compounding taking place? Explain. e. If you purchased a two-year CD for $150,000 from First Command Bank, the APY (4.05%) was greater than the APR (3.98%) because compounding was taking place. We are not told, however, what the compounding period was. Use the APR to calculate what the APY would be with monthly compounding. How does your answer compare to the APY in the table ?

Financial Reporting, Financial Statement Analysis and Valuation
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter4: Profitability Analysis
Section: Chapter Questions
Problem 22PC: Selected data for General Mills for 2007, 2008, and 2009 appear below (amounts in millions)....
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TABLE 4.1 Rates from First Command Bank (2008–2009) CD rates with quarterly compounding APR 30 Day S1000 - 599.999.99 APY 321% 3.25% S100.000 + 3.26% 3.30% 90 Day APR APY SI000 - S9999.99 3.22% 3.25% SI0,000 - 599.99999 3.26% 3.30% S100000 I Year 335% 3.40% APR APY S1000 - $9999.99 3.31% 3.35% SI0,00 - 599.999.99 335% 3.40% S100.000 + 3.55% 3.60% I8 Month APR APY SI000 - $9999.99 3.56% 3.60% SI0000 - $99,999.99 3.59% 3.74% 3.65% S100,000 + 3.80% 2 Year SI000 - $9999 99 APR APY 3.80% 3.85% SI0,000 - 599.999.99 3.84% 3.90% S100.000 + 3.98% 4.05% Some interest and APY calculations. Parts b and e refer to the 2008–2009 rates at First Command Bank shown in Table 4.1. a. Assume that a one-year CD for $5000 pays an APR of 8% that is compounded quarterly. How much total interest does it earn? What is the APY? b. If you purchased a one-year CD for $150,000 from First Command Bank, how much interest would you have received at maturity? Was compounding taking place? Explain. e. If you purchased a two-year CD for $150,000 from First Command Bank, the APY (4.05%) was greater than the APR (3.98%) because compounding was taking place. We are not told, however, what the compounding period was. Use the APR to calculate what the APY would be with monthly compounding. How does your answer compare to the APY in the table?
Transcribed Image Text:TABLE 4.1 Rates from First Command Bank (2008–2009) CD rates with quarterly compounding APR 30 Day S1000 - 599.999.99 APY 321% 3.25% S100.000 + 3.26% 3.30% 90 Day APR APY SI000 - S9999.99 3.22% 3.25% SI0,000 - 599.99999 3.26% 3.30% S100000 I Year 335% 3.40% APR APY S1000 - $9999.99 3.31% 3.35% SI0,00 - 599.999.99 335% 3.40% S100.000 + 3.55% 3.60% I8 Month APR APY SI000 - $9999.99 3.56% 3.60% SI0000 - $99,999.99 3.59% 3.74% 3.65% S100,000 + 3.80% 2 Year SI000 - $9999 99 APR APY 3.80% 3.85% SI0,000 - 599.999.99 3.84% 3.90% S100.000 + 3.98% 4.05% Some interest and APY calculations. Parts b and e refer to the 2008–2009 rates at First Command Bank shown in Table 4.1. a. Assume that a one-year CD for $5000 pays an APR of 8% that is compounded quarterly. How much total interest does it earn? What is the APY? b. If you purchased a one-year CD for $150,000 from First Command Bank, how much interest would you have received at maturity? Was compounding taking place? Explain. e. If you purchased a two-year CD for $150,000 from First Command Bank, the APY (4.05%) was greater than the APR (3.98%) because compounding was taking place. We are not told, however, what the compounding period was. Use the APR to calculate what the APY would be with monthly compounding. How does your answer compare to the APY in the table?
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