Value at maturity if the interest is reinvested in deposit

Assignment Help Financial Management
Reference no: EM13942191

A person places $5,000 in a certificate of deposit that matures in 20 years and pays annual interest rate of 3%. What will be the value at maturity if the interest is reinvested in the deposit? a. How much interest will accumulate after 20 years? b. How much would they receive annually if they chose not to reinvest the interest and what would be the total interest paid out over 20 years? c. Why are answers a and b different?

Reference no: EM13942191

Questions Cloud

The firm has started marketing its new product : The firm has started marketing its new product at a price of $25.00 per unit; however, the average variable cost of the product is $30.00.
Treasury bills have produced the returns : Over the past 4 years, large-company stocks and U.S. Treasury bills have produced the returns stated below. Given this information, 1. What are the average rates of return on large-company stocks and Treasury bills? 2. What are the standard deviation..
How to use casscading style sheets to implement my web page. : I need to create links, buttons, and use java scripts. No Equations are involved. Although just alot of code.
Discusses a famous paradox from ancient greece : Our text discusses a famous paradox from ancient Greece, the so-called sorites paradox. The Greeks (as well as many other ancients) were interested in paradoxes because they seemed to present unresolvable logical or mathematical difficulties but whic..
Value at maturity if the interest is reinvested in deposit : A person places $5,000 in a certificate of deposit that matures in 20 years and pays annual interest rate of 3%. What will be the value at maturity if the interest is reinvested in the deposit? How much interest will accumulate after 20 years?
Required to keep contribution margin ratio constant : Consider Exercise 12-8-b. How many units of the new product must be sold (if the selling price is $14.00) to breakeven on the new product?
Should the government raise the minimum wage : Do you think Walmart should raise wages to $15/hour to match what labor activists are calling for? Why or why not? Should the government raise the minimum wage and if so, to what level? Please support your answer
Identify the causes of sexual offending : While a great deal of research has been conducted attempting to identify the causes of sexual offending, a general consensus has not been reached. Instead a mix of social, environmental, psychological, and biological factors have been found to con..
Determine temperature of a flat piece of the coated aluminum : Determine the equilibrium temperature of a flat piece of the coated aluminum that is exposed to solar irradiation, GS = 1368 W/m2 on its upper surface. The opposite surface is insulated.

Reviews

Write a Review

Financial Management Questions & Answers

  Two mutually exclusive extraction projects

An oil drilling company must choose between two mutually exclusive extraction projects, and each costs $11.8 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $14.16 million. Does this imply that the W..

  What is the highest rate you can afford on apr loan

You want to borrow $87,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,550, but no more. Assuming monthly compounding, what is the highest rate you can afford on a 72-month APR loan?

  Describe what kind of working capital that person needs

Find a tradesman/woman who works on houses (plumber, electrician, roofer, etc.). Describe what kind of working capital that person needs (what items, the dollar amounts involved).

  Determine the standard deviation of the portfolio

Determine the expected return of the portfolio if you want to distribute your investment at 30% A, 40% B and 30% in C. Determine the standard deviation of the portfolio. Determine the expected return of the portfolio if you want to distribute your in..

  Maintaining certain amount of debt on their balance sheets

Given a 35% corporate tax rate, for every $1 in new permanent debt that the firm issues, the value of the firm increases by $0.65. The firm’s marginal tax rate may fluctuate due to changes in the tax code and changes in the firm’s income bracket. Man..

  Calculate maximum mortgage amounts for conventional insured

You would like a fixed-rate, constant-payment 25-year mortgage. You are a VA and are eligible for a VA guaranteed mortgage, however you have used your VA guarantee benefits. Calculate the maximum mortgage amounts for conventional insured and FHA. Do ..

  Stock futures contract is priced

A stock futures contract is priced at $38.80. The stock has a dividend yield of 1.2 percent, and the risk-free rate is 2.45 percent. If the futures contract matures in eight months, what is the current stock price?

  Find the sustainable and internal growth rates for firm

Find the sustainable and internal growth rates for a firm with the following ratios: asset turnover = 2.40; profit margin = 5%; payout ratio = 25%; equity/assets = .20. (Do not round intermediate calculations. Enter your answers as a percent rounded ..

  Convert the borrowed ugandan shillings to target currency

On Monday, you borrow your funding currency (the Ugandan Shilling) at the Ugandan borrowing rate, convert the borrowed Ugandan Shillings to the target currency (the US Dollar) and invest it at the US lending rate until Friday.

  How the fed should respond to prevailing conditionsconsider

how the fed should respond to prevailing conditions.consider the existing economic conditions including inflation and

  What is the present value of the bond

A 10-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 5.50% (2.750% of face value every six months). The semi annually compounded interest rate is 4.6% (a six-month discount rate of 4.6/2 = 2.3%). What is the present value of the..

  What is the expected market price per share

You are thinking about buying a share of Glencoe Industries, which has a current market price of $30.00 per share. Glencoe expects to pay a dividend of $1.125 per share next year. Your required rate of return on these types of investments s 6% and is..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd