a) First City Bank pays 6 percent simple interest on its savings account balance
ID: 2704894 • Letter: A
Question
a) First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually. If you made a deposit of $7,500 in each bank, how much more money would you earn from your Second City Bank account at the end of 10 years?
b) Assume the total cost of a college education will be $280,000 when your child enters college in 18 years. You presently have $45,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child
Explanation / Answer
Answer for B: FV=280,000 N=18 PV=-45,000 I/YR=10.68992
Assume the total cost of a college education will be $280,000 when your child enters college in 18 years. You presently have $45,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child
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