You are planning to save your Christmas bonuses from work an are comparing savings accounts: Account A compounds semiannually while account B compounds monthly. If both accounts have the same quoted annual rate of interest and you place only the bonuses in the account, you should choose
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- Please use Excel to Solve Future value: Your birthday is next week and instead of other presents, your parents promised to give you $1,000 in cash. Since you have a part-time job and, thus, don't need the cash immediately, you decide to invest the money in a bank CD that pays 5.2 percent, compounded quarterly, for the next two years. How much money can you expect to earn in this period of time?Suppose that you’d like to retire in 40 years and you want to have a future value of $ 1000000 in a savings account. Also suppose that your employer makes regular monthly payments into your retirement account. If you can expect an APR of 6.5% for your account, how much do you need your employer to deposit each month? Employer Contribution = The formulas we have been using assume that the interest rate is constant over the period in question. Over a period of 40 years, though, interest rates can vary widely. To see what difference the interest rate can make, let’s assume a constant APR of 5% for your retirement account. How much do you need your employer to deposit each month under this assumption? Employer Contribution =Would you rather have a savings account that pays 5% interest compounded semiannually or one that pays interest compounded daily? Show in excel to understand the calculation
- At the Central Furniture Company, customers who buy on credit pay an effective annual interest rate of 16.1%, based on monthly compounding. (a) What is the nominal annual interest rate that they pay? (b) Research the effective annual interest rates charged on a credit card that you or a friend has. How does the rate change if there is a late or skipped payment? What drives these rates? Are the rates ethical? Why or why not?Paige is planning on depositing $1,000 in one of two different savings accounts from two financial institutions: MoneyFirst and MakeCents. The MoneyFirst account offers an interest rate of 0.15% APR, compounded monthly. The MakeCents account offers an interest rate of 0.14% APR, compounded weekly. Which is the better financial decision: the higher interest rate or the more frequent compounding? Higher interest rate More frequent compoundingSuppose that the parents of a young child decide to make annual deposits into a savings account, with the first deposit being made on the child’s fifth birthday and the last deposit being made on the 15th birthday. Then, starting on the child’s 18th birthday, the withdrawals as shown will be made. If the effective annual interest rate is 8% during this period of time, what are the annual deposits in years 5 through 15? Use a uniform gradient amount (G) in your solution. (See shown figure )
- Suppose that the parents of a young child decide to make annual deposits into a savings account, with the first deposit being made on the child's fifth birthday and the last deposit being made on the 15th birthday. Then, starting on the child's 18th birthday, the withdrawals as shown on the diagram below will be made. If the effective annual interest rate is 6% during this period of time, what are the annual deposits in years 5 through 15? Use a uniform gradient amount (G) in your solution. The annual deposits in years 5 through 15 are $?You have invested your annual bonus in a one year fixed deposit at Alpha Bank which offers a nominalinterest rate of 12% per annum compounded bi-annually. However, at a braai over the weekend, yourfriend has pointed out that you should have rather invested at the same bank he is a client of, namelyBeta Bank, because even though the nominal interest rate is half a percent less than Alpha Bank, theinterest is compounded quarterly, and you will therefore get a greater return.REQUIRED:Discuss whether your friend’s advice was correct. Provide calculations to support your answerAfter paying off a car loan or credit card, don’t remove this amount from your budget. Instead, invest in your future by applying some of it to your retirement account. How much would $520 invested at the end of each quarter be worth in 12 years at 6% interest? (Please use the following provided Table.)
- A guy is wondering which account he should invest in Account A- earns an APR of 4% of compunded monthly Account B- intrest is compunded daily, and the effective annual rate is 4%(APR is unknown) In Account B the 4% is an effective annual rate does this mean Account B is better if money is left in there for one year? If the money is left in there for 1 or more year does it make a diffrence?Which one of the following bank accounts will you choose for a savings account? Bank A: An account that pays 8% nominal interest (APR) with daily (365-day)compounding. Bank B: An account that pays 8% nominal interest (APR) with annual compounding. Bank C: An account that pays 7% nominal interest (APR) with daily (365-day)compounding. Bank D: An account that pays 7% nominal interest (APR) with monthly compounding. Please explain your choice. show in excel for all choice to see calculations What is the effective annual return (EFF) of the account that you picked?Many people get ready for retirement by depositing money into a monthly or annual savings plan. Solve, a. If $300 per month is deposited in a bank account paying a 6% APR compounded monthly, how much will be accumulated in the account after 30 years? b. If inflation is expected to average 2% per year into the foreseeable future, what is today’s equivalent spending power for your answer to Part (a)?