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.) 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? (Select from the drop-down menu.) b. An account that pays 7.3% every 18 months for 3 years? If you deposit $1 into a bank account that pays 7.3% every 18 months for three years: The amount you will receive after three years is $ (Round to five decimal places.) Which bank account would you prefer? (Select from the drop-down menu.) C. An account that pays 0.46% per month for three years? If you deposit $1 into a bank account that pays 0.46% per month 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.) 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? (Select from the drop-down menu.) b. An account that pays 7.3% every 18 months for 3 years? If you deposit $1 into a bank account that pays 7.3% every 18 months for three years: The amount you will receive after three years is $ (Round to five decimal places.) Which bank account would you prefer? (Select from the drop-down menu.) C. An account that pays 0.46% per month for three years? If you deposit $1 into a bank account that pays 0.46% per month for three years The amount you will receive after three years is $ (Round to five decimal places.)
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 3PA: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...
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Question
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 year for three years)(Select from the drop-down menu.)
Part 4
b. An account that pays 7.3% every 18 months for 3 years?
If you deposit $1 into a bank account that pays 7.3% every 18 months for three years:
The amount you will receive after three years is $_______ (Round to five decimal places.)
Part 5
Which bank account would you prefer? (7.3% every 18 months for three years/5.5% per year for three years) (Select from the drop-down menu.)
Part 6
c. An account that pays 0.46% per month for three years?
If you deposit $1 into a bank account that pays 0.46% per month for three years
The amount you will receive after three years is $_______ (Round to five decimal places.)
Transcribed Image Text: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.)
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?
(Select from the drop-down menu.)
b. An account that pays 7.3% every 18 months for 3 years?
If you deposit $1 into a bank account that pays 7.3% every 18 months for three years:
The amount you will receive after three years is $ (Round to five decimal places.)
Which bank account would you prefer?
(Select from the drop-down menu.)
c. An account that pays 0.46% per month for three years?
If you deposit $1 into a bank account that pays 0.46% per month for three years
The amount you will receive after three years is $. (Round to five decimal places.)
Which bank account would you prefer?
(Select from the drop-down menu.)
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