Save Exit Submit Assignment for Grading Question 16 of 34 Check My Work Chapter

Question

Save Exit Submit Assignment for Grading Question 16 of 34 Check My Work Chapter 11 Section 1 Review Exercise #32) Solve the following word problem by using Table 11-1. The First National Bank is offering a 5-year certificate of deposit (CD) at 4% interest compounded quarterly; Second National Bank is offering a 6-year CD at 3% interest compounded annually. Round percentage answers to two decimal places. Round dollars to the nearest cent. Do not round intermediate calculations Click here for Table 11-1 a. If you were interested in investing $7,000 in one of these CDs, calculate the compound amount of each offer First National: $8,888.11 Second National: $ 8,358.35 b. What is the annual percentage yield of each CD? Do not enter the percent symbol in your answer First National: Second National: c. If Third National Bank has a 6-year CD at 3.5% interest compounded monthly, use the compound interest formula to calculate the compound amount of this offer Converted)

Explanation / Answer

a)

First :

7000(1+0.04/4)^(6*4) =$ 8888.14

Second:

7000(1+0.03)^(6) = $8358.37

b)

First :

(1+0.04/4)^4 -1 =4.06%

Second :

3%

c)

7000(1+3.5/1200)^(6*12) =$8633.11

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