Sarah has invested $7,800 in a savings certificate paying a guaranteed rate of 4.28% compounded quarterly...

Sarah has invested $7,800 in a savings certificate paying a guaranteed rate of 4.28% compounded quarterly for a term of eight years. Note this is a single payment. a. Find the interest rate per conversion interval. b. Find the future value of the investment at the end of eight years. . c. Find the total interest earned over the eight years. d. Set up the expression for finding the effective annual rate (EAR) of 4.28% compounded quarterly and evaluate the expression. Express your answer to four places after the decimal point. (Example: 0.1234)

Expert Solution

1.
=4.28%/4=1.07%

2.
=7800*(1+4.28%/4)^(4*8)=10964.9613481915

3.
=7800*(1+4.28%/4)^(4*8)-7800=3164.96134819145

4.
EAR=(1+nominal rate/4)^4-1=(1+4.28%/4)^4-1=4.349185327996%

jeff jeffy answered 2 years ago

trinity hs invested $8,800 in a savings certificate paying a guaranteed rate of 4.28% compounded quarterly...

trinity hs invested $8,800 in a savings certificate paying a guaranteed rate of 4.28% compounded quarterly for a term of eight years. 1. find the interest rate per conversion interval. 2. find the future value of the investment at the end of eight years. 3. find the total interest earned over the eight years. 4. set up the expression for finding an effective annual rate of 4.28% compounded quarterly and evaluate the expression.

Jason and Sarah Allen invested $7,200 in a savings account paying 6% annual interest when their...

Jason and Sarah Allen invested $7,200 in a savings account paying 6% annual interest when their daughter, Angela, was born. They also deposited $1,100 on each of her birthdays until she was 16 (including her 16th birthday). Click here to view the factor table 1. Table 2 Table 3 Table 4 How much was in the savings account on her 16th birthday (after the last deposit)? (For calculation purposes, use 5 decimal places as displayed in the factor table provided,...

1. what is the effective interest rate for a savings accounting that is compounded quarterly at...

1. what is the effective interest rate for a savings accounting that is compounded quarterly at 8%? 2. a bond has a current market price of $1230.00. it is said to be selling at a a. premium b. discount. c. bonus d. reward 2. bond c has a $1000 face value and provides an 8% semiannual coupon for 15 years. the appropriate discount rate is 10% (annual rate). what is the value of the coupon bond? 3. if the next...

If 25,000 is invested into an account paying 4.5% per year, compounded quarterly, how much money...

If 25,000 is invested into an account paying 4.5% per year, compounded quarterly, how much money can be withdrawn from the account every two month for the next 6 years

Matt recently deposited $27,000 in a savings account paying a guaranteed interest rate of 4 percent...

Matt recently deposited $27,000 in a savings account paying a guaranteed interest rate of 4 percent for the next 10 years. A) If Matt expects his marginal tax rate to be 32.00 percent for the next 10 years, how much interest will he earn after-tax for the first year of his investment? B) How much interest will he earn after-tax for the second year of his investment if he withdraws enough cash every year to pay the tax on the...

Matt recently deposited $30,000 in a savings account paying a guaranteed interest rate of 5 percent...

Matt recently deposited $30,000 in a savings account paying a guaranteed interest rate of 5 percent for the next 10 years. If Matt expects his marginal tax rate to be 22 percent for the next 10 years, how much interest will he earn after-tax after the seventh year of his investment if he withdraws enough cash every year to pay the tax on the interest he earns? Dana intends to invest $25,000 in either a Treasury bond or a corporate...

1.Matt recently deposited $30,000 in a savings account paying a guaranteed interest rate of 4 percent...

1.Matt recently deposited $30,000 in a savings account paying a guaranteed interest rate of 4 percent for the next 10 years. If Matt expects his marginal tax rate to be 22 percent for the next 10 years, how much interest will he earn after-tax after the fourth year of his investment if he withdraws enough cash every year to pay the tax on the interest he earns? 2. Dana intends to invest $25,000 in either a Treasury bond or a...

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?

Allied Bank offers a nominal rate of 5.0% interest, compounded quarterly on a savings account. Standard...

Allied Bank offers a nominal rate of 5.0% interest, compounded quarterly on a savings account. Standard Bank offers 6.0% interest compounded annually on a savings account. Which bank will you select to deposit your money?

Consider a $100 investment paying 3.5% compounded daily, what is the equivalent quarterly rate ? 0.8750%...

Consider a $100 investment paying 3.5% compounded daily, what is the equivalent quarterly rate ? 0.8750% 0.8776% 0.0095% none of the above 0.8788%

Question