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, the amount you will receive after three years is $nothing. (Round to five decimal places.) Therefore, you will prefer: ▼ 5% per year for three years 7.5% every 18 months for three years . (Select from the drop-down menu.) c. An account that pays 0.5% per month for three years? If the account pays 0.5% every month for three years, the amount you will receive after three years is $_______________ (Round to five decimal places.) Therefore, you will prefer: ▼ 0.5% every month for three years 5 % per year for three years . (Select from the drop-down m

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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Question

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Which do you prefer: a bank account that pays

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

into a bank account that pays

per year for three years, you will have

$nothing.

(Round to five decimal places.)

If you deposit

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, the amount you will receive after three years is

$nothing.

(Round to five decimal places.)

Therefore, you will prefer:

▼

5% per year for three years

7.5% every 18 months for three years

(Select from the drop-down menu.)

c. An account that pays

0.5%

per month for three years?

If the account pays

0.5%

every month for three years, the amount you will receive after three years is

$_______________

(Round to five decimal places.)

Therefore, you will prefer:

▼

0.5% every month for three years

5 % per year for three years

(Select from the drop-down m

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