E connect FINANCE 5 homework KQuestion 16 (of 20) 10.00 points Problem 5-32 Calc
ID: 2749065 • Letter: E
Question
E connect FINANCE 5 homework KQuestion 16 (of 20) 10.00 points Problem 5-32 Calculating the Number of Periods. [LO 4] You are saving to buy a $176,000 house. There are two competing banks in your area, both offering certificates of deposit yielding 6.1 percent Requirement 1: How long will it take your initial $93,000 investment to reach the desired level at First Bank, which pays simple interest? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places(e.g., 32.16).) Number of years Requirement 2: How long will it take your initial $93,000 investment to reach the desired level at Second Bank, which compounds interest monthly? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16)-) Number of years ezto.mheducation.com/hm.tpxExplanation / Answer
Requirement:1
When simple interest , It will take approx 15 years to make $ 93,000 at desired level
matured amount =no of years* Interest+principal amount
176000= no of years*93000*6.01%+93000
No of years=(176000-96000)/93000*6.01%
=15 years approx.
Requirement :2
When compound interest
A=P(1+R/100)^n
where,
A= matured amount
P = principal amonut
R= rate of interst
N= no of period
176000=93000*(1+6.01/12/100)^n
N= 10.67 years
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