Which do you prefer: a bank account that pays 10% per year (EAR) for 3 years ora. 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 preferb. 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 1.0% every month for 3 years, the amount you will receive after 3 years is $Therefore, you will prefer(Select from the drop-down menu.)(Round to five decimal places.)(Round to five decimal places.)(Round to five decimal places.)

In compounding there is interest on interest due to which effective interest rate is more and more…

hich do you prefer: a bank account that pays 10% per year (EAR) for 3 years or An account that pays 5.0% every 6 months for 3 years? An account that pays 15.0% every 18 months for 3 years? An account that pays 1.0% per month for 3 years? An account that pays 5.0% every 6 months for 3 years? you deposit $1 into a bank account that pays 10% per year for 3 years, the amount you will receive after 3 years is $ (Round to five decim 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 $. (Round to five herefore, you will prefer (Select from the drop-down menu.) An account that pays 15.0% every 18 months for 3 years? 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 $ herefore, you will prefer (Select from the drop-down menu.) (Round to

hich do you prefer: a bank account that pays 10% per year (EAR) for 3 years or An account that pays 5.0% every 6 months for 3 years? An account that pays 15.0% every 18 months for 3 years? An account that pays 1.0% per month for 3 years? An account that pays 5.0% every 6 months for 3 years? you deposit $1 into a bank account that pays 10% per year for 3 years, the amount you will receive after 3 years is $ (Round to five decim 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 $. (Round to five herefore, you will prefer (Select from the drop-down menu.) An account that pays 15.0% every 18 months for 3 years? 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 $ herefore, you will prefer (Select from the drop-down menu.) (Round to

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...

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Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
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,…
Do the relevant calculations so you can indicate which you prefer: a bank account that pays 5.8% per year (EAR) for 3 years or a. an account that pays 2.6% every 6 months for 3 years? b. an account that pays 7.6% every 18 months for 3 years? c. an account that pays 0.58% per month for 3 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 5.8% 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 5.0% 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 5.0% 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 5.5% 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 5.3% 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…
A friend asks to borrow $53.00 from you and in return will pay you $56.00 in one year. If your bank is offering a 5.7% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $53.00 instead? b. How much money could you borrow today if you pay the bank $56.00 in one year? c. Should you loan the money to your friend or deposit it in the bank? a. How much would you have in one year if you deposited the $53.00 instead? If you deposit the $53.00 in the bank today, you will have $ in one year. (Round to the nearest cent.)
A friend asks to borrow $48 from you and return will pay you $51 in one year. If your bank is offering a 6.5% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $48 instead? b. How much money could you borrow today if you pay the bank $51 in one year? c. Should you loan the money to your friend or deposit it in the bank? D
A friend asks to borrow $45 from you and in return will pay you $48 in one year. If your bank is offering a 5.7% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $45 instead? b. How much money could you borrow today if you pay the bank $48 in one year? c. Should you loan the money to your friend or deposit it in the bank? a. How much would you have in one year if you deposited the $45 instead? If you deposit the money in the bank today you will have in one year. (Round to the nearest cent.) b. How much money could you borrow today if you pay the bank $48 in one year? You will be able to borrow $ today. (Round to the nearest cent.) c. Should you loan the money to your friend or deposit it in the bank? (Select from the drop-down menu.) From a financial perspective, you should as it will result in more money for you at the end of the year.