An individual invests $2,000 in a one year Certificate of Deposit paying interest at a rate of 1.25%.

An individual invests $2,000 in a one year Certificate of Deposit paying interest at a rate of 1.25%. How much will the individual have after one year?

A. $2,000

B. $2,250

C. $2,025

Expert Solution

Ans C. $2,025

FV =	Future Value
PV =	Present Value
r =	rate of interest
n=	no of period


FV =	PV (1 + r )^n
FV =	2000*(1+ 1.25%)^1
FV =	2025.00

jeff jeffy answered 2 years ago

An individual invests $2,000 for three years and earns interest at a rate of 2.125%. If...

An individual invests $2,000 for three years and earns interest at a rate of 2.125%. If interest is compounded quarterly, how much will the individual have after three years? A. $2,127.50 B. $2,131.29 C. $2,130.94

Suppose an investor invests $2,000 in a Certificate of Deposit which earns eight percent compounded quarterly....

Suppose an investor invests $2,000 in a Certificate of Deposit which earns eight percent compounded quarterly. What is the value of the CD in five years a.$2,208 b.$2,939 c.$2,800 d.$2,972 e.None of the above 2. Suppose an investor invests $2,000 at the beginning of each year. What will be the value of the investment at the end of ten years if he earns ten percent? $31,875 $35,062 $13, 518 $12,289 $20,000 3. You could gift any number of people _____...

One bank advertises an interest rate on a certificate of deposit (CD) with a 5.6% effective...

One bank advertises an interest rate on a certificate of deposit (CD) with a 5.6% effective annual rate. If $1000 were invested in this CD today, what would be the future value in 5 years? Report the answer to at least 4 significant figures.

A bank has issued a one- year certificate of deposit for $50 million at an interest...

A bank has issued a one- year certificate of deposit for $50 million at an interest rate of 2 percent. With the proceeds, the bank has purchased a two- year Treasury note that pays 4 percent interest. a) What is the Bank's asset? b) What is the Bank's liability? c) What risk does the bank face in entering into these transactions? d) What would happen if all interest rates were to rise by 1 percent? Will the bank earn or...

The file CD Rate contains yields for a one-year certificate of deposit (CD) and a five-year...

The file CD Rate contains yields for a one-year certificate of deposit (CD) and a five-year CD for 39 banks listed for West Palm Beach, Florida on January 9, 2017. For each type of investment, decide whether the data appear to be approximately normally distributed by: a. comparing data characteristics to theoretical properties. b. constructing a normal probability plot Bank One-Year Five-Year 5 Star Bank 1.00 1.60 Alostar Bank of Commerce 1.05 1.66 Amalgamated Bank 0.50 1.10 AmTrust Bank 0.40...

Lupe put $12,000in a certificate of deposit that gained interest at a rate of 9.5%. How...

Lupe put $12,000in a certificate of deposit that gained interest at a rate of 9.5%. How much interest did the account gain after 2 months? How much interest will you have to pay for a credit card balance of $791 that is 1 month overdue,if a 22% annual rate is charged?

Compute the future value at the end of year five (5) of a $2,000 deposit at the end of year one (1) and another $2,000 deposit at the end of year two (2) using a seven (7) percent interest rate per year.

Compute the future value at the end of year five (5) of a $2,000 deposit at the end of year one (1) and another $2,000 deposit at the end of year two (2) using a seven (7) percent interest rate per year.Group of answer choicesA. $5,071.68B. $2,805.10C. $5,426.70D. $4,739.89E. $2,621.59

The bank offers a certificate of deposit (CD) with a stated interest rate of 8.00% per year, compounded semi-annualy.

1. The bank offers a certificate of deposit (CD) with a stated interest rate of 8.00% per year, compounded semi-annualy. While another bank offers a CD with an interest rate of7.92% per year, compounded monthly. Which CD should you invest in if you want to maximize your effective annual rate (EAR)?2. An insurance company is offering a product called "retirement insurance." the retirement insurance promises to pay you 20,000 per year, with the first payment coming a year after your...

You are considering saving $10,000 in a bank certificate of deposit. Stated interest rate is 9%....

You are considering saving $10,000 in a bank certificate of deposit. Stated interest rate is 9%. Find: 1. The future value in 20 years with quarterly compounding. 2. What is effective rate with quarterly compounding? 3. You anticipate needing $30,000 for a down payment on a home in six years. If you earn 6%, how much must you set aside now to achieve this? 4. Referring to #3, how much would you have to set aside at the end of...

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....

Question