Problem 5 1 Simple Interest Versus Compound Interest Lo1 First City Bank Pays 8 Percent Simple Interest On Its Savings 1 (66.23 KiB) Viewed 57 times
Problem 5-1 Simple Interest versus Compound Interest (LO1] First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually. If you made a deposit of $58,000 in each bank, how much more money would you earn from your Second City Bank account at the end of 8 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Difference in accounts
Problem 5-10 Calculating Present Values (LO2] Imprudential, Incorporated, has an unfunded pension liability of $573 million that must be paid in 20 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 6.6 percent, what is the present value of this liability? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89) Present value
Problem 5-17 Calculating Present Values (LO2] Suppose you are committed to owning a $193,000 Ferrari. If you believe your mutual fund can achieve an annual rate of return of 12 percent and you want to buy the car in 9 years (on the day you turn 30), how much must you invest today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Investment
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