You buy a 2-year, 8 percent savings certificate for $1,000. If interest is compounded annually, what...

You buy a 2-year, 8 percent savings certificate for $1,000. If interest is compounded annually, what will be its value at maturity?

a. $1,067.43

b. $1,166.40

c. $1,201.03

d. $1,396.57

e. $1,466.33

Expert Solution

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=1000*(1.08)^2

=1000*1.1664

=$1166.4

jeff jeffy answered 2 years ago

You buy a 2-year, 8 percent savings certificate for $1,000. If interest is compounded semi-annually, what...

You buy a 2-year, 8 percent savings certificate for $1,000. If interest is compounded semi-annually, what will be its value at maturity? a. $1,067.43 b. $1,146.40 c. $1,169.86 d. $1,201.03 e. $1,396.57

16. Assume that you purchase a 6-year, 8% savings certificate for $1,000. If interest is compounded...

16. Assume that you purchase a 6-year, 8% savings certificate for $1,000. If interest is compounded annually, what will be the value of the certificate when it matures? * A. $630.17 B. $1,469.33 C. $1,677.10 D. $1,586.87 E. None of the above. 17. Suppose you make 5 annual deposits of $1,000 in a savings account paying 6% compounded annually. The deposits are made at the beginning of each year. What amount would be in your account in year 5? *...

A) Bank A offers a 2-year certificate of deposit (CD) that pays 10 percent compounded annually....

A) Bank A offers a 2-year certificate of deposit (CD) that pays 10 percent compounded annually. Bank B offers a 2-year CD that is compounded semi-annually. The CDs have identical risk. What is the APR that Bank B would have to offer to make its EAR equivalent to the CD at Bank A?

You invest $2,800 in a 4-year certificate of deposit (CD) that pays 3.8% interest, compounded annually....

You invest $2,800 in a 4-year certificate of deposit (CD) that pays 3.8% interest, compounded annually. How much money will you have when the CD matures?

Determine how much $1,000 deposited in a savings account paying 8% (compounded annually) will be worth...

Determine how much $1,000 deposited in a savings account paying 8% (compounded annually) will be worth after 5 years. how would you insert this in a financial calculator? confused on how to input (FVIF .08,5)

On January 1, $5000 is deposited into a high-interest savings account that pays 8% interest compounded annually.

On January 1, $5000 is deposited into a high-interest savings account that pays 8% interest compounded annually. If all the money is withdrawn in 5 equal end-of-year sums beginning December 31 of the first year, how much will each withdrawal be?

(Bond valuation) You own a 20-year, $1,000 par value bond paying 8 percent interest annually. The...

(Bond valuation) You own a 20-year, $1,000 par value bond paying 8 percent interest annually. The market price of the bond is $850 and your required rate of return is 11 percent. a. Compute the bond's expected rate of return. b. Determine the value of the bond to you, given your required rate of return. c. Should you sell the bond or continue to own it?

A. An investor places $1,000 in a Certificate of Deposit that pays 1.5% annual interest. If interest is compounded annually, how much will the investor have after three years?

A. An investor places $1,000 in a Certificate of Deposit that pays 1.5% annual interest. If interest is compounded annually, how much will the investor have after three years? B. Using the same information in problem 1, how much would the investor have if interest was compounded quarterly? C. An investor has $1,000 and wants to open a Certificate of Deposit. If Citibank offers a CD that pays interest semiannually at a rate of 1.3% while Chase offers a CD...

A. A $10,000 certificate of deposit earns simple interest of 8 percent per year. Calculate the...

A. A $10,000 certificate of deposit earns simple interest of 8 percent per year. Calculate the total earned money over the 5 year period? B. A sum of $22,000 is invested in a savings account which pays interest at the rate of 7 percent per year compounded quarterly. If the amount is kept on deposit for 10 years, what will the compound amount equal? How much interest will be earned during the 10 Years. Also calculate the effective interest rate....

South Central Bank pays 2.5 percent interest, compounded annually, on its savings accounts. Northern Bank pays...

South Central Bank pays 2.5 percent interest, compounded annually, on its savings accounts. Northern Bank pays 2.5 percent simple interest on its savings accounts. You want to deposit sufficient funds today so that you will have $1,500 in your account 2 years from today. The amount you must deposit today: will be greater if you invest with South Central Bank. is the same regardless of which bank you choose because they both pay the same rate of interest. is the...

Question