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Consider the $50,000 excess cash.Assume that Gary invests the funds in a one -year CD.

a.What is the CD"s value at maturity( future calue)if it pays 10 percent(annual) interest?

b. What will its future value be if the CD pays 5 percent interest? If it pays 15 percent interest?

c.BankSouth offers CDs with 10 percent nominal (stated) interest, but compounded semiannually.What is the effective annual rate on this CD>What will the future value be after one year if $50,000 were invested?

d. The Penescola branch of bank of America offers a 10 percent CD with daily compounding. What are the CD's effective annual rate and its value at maturity one year from now if $50,000 is invested?(Assume a 365 day year)
e.What stated rate will BankSouth have to offer to make its semi annual compounding CD competitive with Bank of America's daily -compoundin CD?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9873581

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