1. a.Time for a lump sum to double How long will it take $600 to double if it earns the following rates? Compounding occ

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1.
a.Time for a lump sum to double
How long will it take $600 to double if it earns the following
rates? Compounding occurs once a year. Round each answer to two
decimal places.
Growth rates
Shalit Corporation's 2011 sales were $7 million. Its 2006 sales
were $3.5 million.
b. At what rate have sales been growing? Round your answer to
two decimal places.
_____%
Effective versus nominal interest rates
Bank A pays 5.5% interest compounded annually on deposits, while
Bank B pays 4.5% compounded daily.
c. Based on the EAR (or EFF%), which bank should you use?
I You would choose Bank A because its EAR is higher.
II You would choose Bank B because its EAR is higher.
III You would choose Bank A because its nominal interest rate is
higher.
IV You would choose Bank B because its nominal interest rate is
higher.
V You are indifferent between the banks and your decision will
be based upon which one offers you a gift for opening an
account.
d. Could your choice of banks be influenced by the fact that you
might want to withdraw your funds during the year as opposed to at
the end of the year? Assume that your funds must be left on deposit
during an entire compounding period in order to receive any
interest.
I If funds must be left on deposit until the end of the
compounding period (1 year for Bank A and 1 day for Bank B), and
you think there is a high probability that you will make a
withdrawal during the year, then Bank A might be preferable.
II If funds must be left on deposit until the end of the
compounding period (1 year for Bank A and 1 day for Bank B), and
you have no intentions of making a withdrawal during the year, then
Bank B might be preferable.
III If funds must be left on deposit until the end of the
compounding period (1 day for Bank A and 1 year for Bank B), and
you think there is a high probability that you will make a
withdrawal during the year, then Bank B might be preferable.
IV If funds must be left on deposit until the end of the
compounding period (1 year for Bank A and 1 day for Bank B), and
you think there is a high probability that you will make a
withdrawal during the year, then Bank B might be preferable.
V If funds must be left on deposit until the end of the
compounding period (1 day for Bank A and 1 year for Bank B), and
you think there is a high probability that you will make a
withdrawal during the year, then Bank A might be preferable.
e. Time to reach a financial goal
You have $19,863.53 in a brokerage account, and you plan to
deposit an additional $6,000 at the end of every future year until
your account totals $240,000. You expect to earn 13% annually on
the account. How many years will it take to reach your goal? Round
your answer to two decimal places at the end of the
calculations.
_______years
Effective rate of interest
Find the interest rates earned on each of the following. Round
each answer to two decimal places.
f. You borrow $700 and promise to pay back $763 at the end of 1
year.
_____%
g. You lend $700 and the borrower promises to pay you $763 at
the end of 1 year.
_____ %
h. You borrow $59,000 and promise to pay back $350,226 at the
end of 12 years.
_____ %
i. You borrow $12,000 and promise to make payments of $2,771.70
at the end of each year for 5 years.
_____ %