Question 1: A bank A offers its depositors an interest rate of 16.6% compounded semi annually....

Question 1: A bank A offers its depositors an interest rate of 16.6% compounded semi annually. Bank B also gives its depositors an interest rate of 16% compounded annually. Determine the effective interest rate for each bank and give your recommendation.

Question 2: Ama is considering these three investment projects with the following details: Investment A requires a cash of $70 million at 12.6% compounded semiannually for 5 years. Investment B requires a cash of $65 million at 10% compounded quarterly for 5 years. Investment C requires a cash of $ 45 million at 9.6% compounded monthly for 5 years. Determine the amount of each investment and the interest earned. Recommend one investment plan for Ama and give reason(s) for your choise.

Question 3: You have opened a savings account with bank WAT at the beginning of the year 2001 that pays 15% interest. You deposited $ 5million into the account the very day it was opened. You traveled to UK and came back in November, 2004. There was no withdrawal from your account. You were informed that, with effect from 1^st January 2005, your savings will earn an interest of 12% compounded quarterly. You deposited additional $7million at the beginning of 2005. You requested for your account statement at the end of 2008 financial year. What was your total amount, if there were no bank charges and withdrawals.

Expert Solution

ekkarill92 answered 2 years ago

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