1. Consider the $50,000 excess cash.Assume that Gary invests the funds

QUESTION

1. Consider the $50,000 excess cash.Assume that Gary invests the funds in a one year CDa.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 w
a) FV= 50,000(1.1000) =55000@10% b) FV= 50,000(1.0500) =52500@5% FV= 50,000(1.1500) =57500@15% c) I2=10% 1 i= (1 i2/2)2 1 i= (1 .10/2)2 =(1.1025) i=1.1025% —-effective annual rate FV=

50000*10.25 = 512500 D)I(365) = 10% 1 I = (1 i(365)/365)365 = 1 I = (1 .10/365)365 =1.1051, i= 10.51 FV = 50000*10.51=525500

ANSWER:

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