Jill just opened a savings account with Santander Bank anddeposited $2,000 into it. The account...

Jill just opened a savings account with Santander Bank and deposited $2,000 into it. The account pays an annual nominal interest of 1%, but interest is compounded every month. If Jill does not make any future deposits or withdrawals, what will her account balance be after 5 years (ignore all service charges and taxes)?

Solutions

Expert Solution

Annual nominal rate = 1 %

monthly interest rate = 1% / 12 = 0.0833%

Number of periods = 5 years * 12 months = 60 months

Particulars	Amount
Present Value	$ 2,000.00
Int Rate	0.0833%
Periods	60

Future Value = Present Value * ( 1 + r )^n
= $ 2000 ( 1 + 0.000833) ^ 60
= $ 2000 ( 1.000833 ^ 60)
= $ 2000 * 1.0512
= $ 2102.5
Jill will have in her account after 5 years is $ 2102.5

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

10 years ago, John opened a savings account with the Citizens Bank by depositing $10,000. The...

10 years ago, John opened a savings account with the Citizens Bank by depositing $10,000. The account pays 5% simple interest. 5 years after his first deposit, he made another deposit of $5,000. What will be the total amount in the account 5 years from now?

Harry has just opened a Registered Retirement Savings Plan (RRSP) with his bank and is wondering,...

Harry has just opened a Registered Retirement Savings Plan (RRSP) with his bank and is wondering, which of the following statements is correct with respect to RRSP contributions? a.Contributions made during the current year and within 30 days of the end of the current year, must be deducted in the current year. b. There is no penalty for making contributions that are in excess of available deduction room. c. Contributions made during the current year can be deducted in any...

At the beginning of the year, you put $2,000 in a new savings account that has...

At the beginning of the year, you put $2,000 in a new savings account that has a 3% annual interest rate, but the account earns interest at the end of every six months. At the end of the first year, you withdraw $1,000 from the account. 1. How much interest have you earned after six months? Show your work. 2. How much interest have you earned after one year? Show your work. 3. What is the total amount in your...

a) On the first day of the month Javier opened a bank account in the name...

a) On the first day of the month Javier opened a bank account in the name of the business; in which I deposit $ 25,000. b) $ 600 was paid in cash for the month's rent. c) A used truck was purchased for $ 8,000 in cash. d) Tools were purchased for $ 3,000 on credit at Home Depot. e) $ 150 was paid in cash for the use of electric power. f) $ 1,500 was paid in advance for...

Sulema’s employer provides her with $2,000 in a medical savings account and a catastrophic health insurance...

Sulema’s employer provides her with $2,000 in a medical savings account and a catastrophic health insurance policy with a deductible of $5,000. What happens if she is in a car accident and has medical bills totaling $15,000? Sulema pays $13,000 out of pocket, $2,000 from her medical savings account. The catastrophic coverage kicks in, paying all the expenses. Sulema’s medical savings account pays $2,000 and she pays $3,000 out of pocket before the catastrophic policy kicks in Sulema pays the...

Susan is 22 years old and today she opened a savings account that offers an interest...

Susan is 22 years old and today she opened a savings account that offers an interest rate of 12% per year, with an initial deposit of 15000 KD. For the following years she plans to deposit the same amount but with an increase of 150 KD every year until she retires at age 61. a) How much will Susan have available when she retires? b) Calculate the annual equivalent of Susan’s savings plan.

June 1 The owner opened a bank account for the business with a deposit of $35,000....

June 1 The owner opened a bank account for the business with a deposit of $35,000. This is capital provided by him. 1 Purchased display stands, shelving etc. (shop equipment) from Shop Displays Pty Ltd for $35,000 and computer equipment for the shop from Computer Wizards for $5,000. These were paid for with a loan of $36,000 from the bank and cheque for $4,000 from the business bank account. The bank loan is repayable over 4 years. 2 Paid $4,680...

1. Drawing on her account at Comerica Bank, Jack writes a check to Jill, who deposits...

1. Drawing on her account at Comerica Bank, Jack writes a check to Jill, who deposits the check in her checking account at Chase Bank. Once the check has cleared, which of the following would have occurred to bank reserves and the M1 money supply? (More than one answer is correct) a. Bank reserves at Chase would have decreased, and bank reserves at Comerica would have increased. b. Total bank reserves would have increased; there would have been no change...

You have just received an endowment and placed this money in a savings account at an...

You have just received an endowment and placed this money in a savings account at an annual rate of 13.58 percent. You are going to withdraw the following cash flows for the next five years. End of year 1. $7,512 2. $8,140 3. $4,455 4. $3,122 5. $1,857 How much is the endowment that you received? Round the answer to two decimal places.

Bank A offers a savings account with interest rate of 2% compounded quarterly. Bank B offers...

Bank A offers a savings account with interest rate of 2% compounded quarterly. Bank B offers a savings account with interest rate of 2.25% compounded semi-annually. Assume customer can deposit $5,000 and leave it on deposit for 4 years. What would be the final value for each bank account?

Subjects