There is an expected payment thirty years from today of $9,000,000 and interest rates for the...

There is an expected payment thirty years from today of $9,000,000 and interest rates for the thirty-year period are yielding 4%, what is the present value for the future payment?

a) A bank wants to increase deposits and is looking to increase their savings interest rate to achieve this goal. The bank wants to raise $9,000,000 through this program and is willing to pay 3% to achieve the goal. The bank expects to reduce this introductory offer in 5-years and thus all depositors will remove their funds from their account. How much will they have to pay out in interest to achieve their goal?

b) A bank wants to increase deposits and is looking to increase their savings interest rate to achieve this goal. The bank wants to raise $1,000,000 through this program and is willing to pay 5% to achieve the goal. How long could the banks keep the accounts active before paying $9,000,000 in interest?

c) A bank wants to increase deposits and is looking to increase their savings interest rate to achieve this goal. What interest rate could the bank pay if they wanted to pay $1,000,000 in interest in 9 years?

You think you will be able to deposit $9,000 at the end of each of the next five years in a bank account paying 6% interest. You currently have $0 in the account. How much will you have in 5 years? How much in 10 years if you add nothing to the account after the fifth year?

Expert Solution

jeff jeffy answered 1 year ago

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