Which do you prefer: a bank account that pays 5.0% per year (EAR) for three years or a. An account that pays 2.5% every six months for three years? b. An account that pays 7.5% every 18 months for three years? c. An account that pays 0.50% per month for three years? (Note: Compare your current bank EAR with each of the three alternative accounts. Be careful not to round any intermediate steps less than six decimal places.)

Which do you prefer: a bank account that pays 5.0% per year (EAR) for three years or a. An account that pays 2.5% every six months for three years? b. An account that pays 7.5% every 18 months for three years? c. An account that pays 0.50% per month for three years? (Note: Compare your current bank EAR with each of the three alternative accounts. Be careful not to round any intermediate steps less than six decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Which do you prefer: a bank account that pays 10% per year (EAR) for 3 years or a. An account that pays 5.0% every 6 months for 3 years? b. An account that pays 15.0% every 18 months for 3 years? c. An account that pays 1.0% per month for 3 years? a. An account that pays 5.0% every 6 months for 3 years? If you deposit $1 into a bank account that pays 10% per year for 3 years, the amount you will receive after 3 years is $ If you deposit $1 into a bank account that pays 5.0% every 6 months for 3 years, the amount you will receive after 3 years is $ (Select from the drop-down menu.) (Round to five decimal places.) Therefore, you will prefer b. An account that pays 15.0% every 18 months for 3 years? If you deposit $1 into a bank account that pays 15.0% every 18 months for 3 years, the amount you will receive after 3 years is $ Therefore, you will prefer (Select from the drop-down menu.) c. An account that pays 1.0% per month for 3 years? If you deposit $1 into a bank account that pays…
Which do you prefer: a bank account that pays 5.5% per year (EAR) for three years or a. An account that pays 2.8% every six months for three years? b. An account that pays 7.3% every 18 months for three years? c. An account that pays 0.46% per month for three years? (Note: Compare your current bank EAR with each of the three alternative accounts. Be careful not to round any intermediate steps less than six decimal places.) If you deposit $1 into a bank account that pays 5.5% per year for three years: The amount you will receive after three years is $ _____(Round to five decimal places.) Part 2 a. An account that pays 2.8% every six months for 3 years? If you deposit $1 into a bank account that pays 2.8% every six months for three years: The amount you will receive after three years is $_____(Round to five decimal places.) Which bank account would you prefer? (2.8 % every six months for three years/5.5% per…
Which do you prefer: a bank account that pays 5.0% per year (EAR) for three years or a. An account that pays 2.5% every six months for three years? b. An account that pays 7.5% every 18 months for three years? c. An account that pays 0.50% per month for three years? (Note: Compare your current bank EAR with each of the three alternative accounts. Be careful not to round any intermediate steps less than six decimal places.) If you deposit $1 into a bank account that pays 5.0% per year for three years: The amount you will receive after three years is _________________(Round to five decimal places.)
Which do you prefer: a bank account that pays 5% per year (EAR) for three years or a. An account that pays 2.5% every six months for three years? b. An account that pays 7.5% every 18 months for three years? c. An account that pays 0.5% per month for three years? a. An account that pays 2.5% every six months for three years? If you deposit $1 into a bank account that pays 5% per year for three years, you will have $nothing. (Round to five decimal places.) If you deposit $1 into a bank account that pays 2.5% every six months for three years, the amount you will receive after three years is $nothing. (Round to five decimal places.) Therefore, you will prefer: ▼ 2.5% every six months for three years 5% per year for three years . (Select from the drop-down menu.) b. An account that pays 7.5% every 18 months for three years? If the account pays 7.5% every 18 months for three years,…
Which do you prefer: a bank account that pays 5.3% per year (EAR) for three years or a. An account that pays 2.9% every six months for three years? b. An account that pays 7.8% every 18 months for three years? c. An account that pays 0.35% per month for three years? (Note: Compare your current bank EAR with each of the three alternative accounts. Be careful not to round any intermediate steps less than six decimal places.) If you deposit $1 into a bank account that pays 5.3% per year for three years: The amount you will receive after three years is $_______ (Round to five decimal places.) Part 2 a. An account that pays 2.9% every six months for 3 years? If you deposit $1 into a bank account that pays 2.9% every six months for three years: The amount you will receive after three years is $______(Round to five decimal places.) Part 3 Which bank account would you prefer? ▼ 5.3% per year for three years…
Suppose you borrow from a bank $1,756.06 today (t=0). You agree to pay back $3,637.64 in 4 years (t=4). The interest rate (%) that the bank charge you is closest to ________%. Input your answer without the % sign and round your answer to two decimal places.
Suppose that you owe $2,000 on a credit card that charges 18% APR and you pay either the minimum 10% or $20, whichever is higher, every month. How long will it take you to eliminate the debt? Assume that the bank uses the previous-balance method to calculate your interest, meaning that the bank does not subtract the amount of your payment from the beginning balance but charges you interest on the previous balance.
Match the following credit terms with the correct description. APR [Choose ] [Choose ] Known as the Annual Percentage Rate. Some credit cards charge these. They can be charged for membership and you may be required to pay them once a year. Credit cards that offer these give you cash or points for purchases you make. Occurs when you don't pay your monthly payment on time. These occur when you transfer your balance to a different card. When you move an existing balance to another credit card or account. The least amount of money you are obligated to pay back on a monthly basis to avoid fees and penalties. [Choose ] [Choose ] [Choose ] [Choose ] Fees Rewards Finance Charges Late fees Balance Transfer Minimum payment
You are shopping around to determine which bank account yields the highest return. You have three choices: 1st - Wesbanco offers an account compounded semi-annually at 3.99% 2nd - PNC offers an account compounded annually at 3.89% 3rd - United offers an account compounded daily at 3.82% You have $2,200 to invest for 2 years. Which account should you choose to have the best return on your investment?
Assume that you have $10,000,000 in your bank account. You wish to withdraw $400,000 per year, at the end of each year, for the next 5 years, after which you wish to have $11,000,000 in the bank. What is the balance in your account after the 2nd year (after the withdrawal)? Hint: you will need first to solve for rate in Excel given all other parameters. Watch signs. Select one: a. $10,366,644 b. $10,600,000 c. $9,600,000 d. $10,488,912
You plan to deposit $700 in a bank account now and $200 at the end of one year. If the account earns 3% interest per year, what will the balance be in the account right after you make the second deposit? There will be $ in the account right after the second deposit. (Type an integer or a decimal.) w an example .... Get more help. Save Clear all In
You get a new credit card from your bank. The document that comes with the card informs you that the interest rate on that card is 19.1% APR. What is the effective annual rate you'll actually be paying? The credit card company uses monthly compounding of interest. Enter your answer as a percentage, rounded to 2 decimals, and without the percentage sign ('%'). For example, if your answer is 0.23456, then enter 23.46 21.98

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