Purchase Solution

Jamie deposits $1,000 into an account paying 6 percent interest, compounded annually.

Not what you're looking for?

Ask Custom Question

Please help with the following questions.

1. Jamie deposits $1,000 into an account paying 6 percent interest, compounded annually. At the same time, Amy deposits $1,000 into an account paying 3 percent interest, compounded annually. Over a 5 year period,
a. both Jamie and Amy will earn the same amount of interest.
b. Jamie will earn exactly twice the amount of interest that Amy earns.
c. Amy will earn exactly twice the amount of interest that Jamie earns.
d. Jamie will earn somewhere between 1 and 2 times the amount of interest that
Amy earns.
e. Jamie will earn more than twice the amount of interest that Amy earns.

2. All else constant, the present value will __________ as the period of time decreases, given an interest rate greater than zero.
a. remain constant
b. decrease
c. increase
d. either remain constant or decrease
e. either remain constant or increase

3. The present value of $10,000 to be received in 10 years will __________ if the discount rate is increased.
a. remain constant
b. decrease
c. increase
d. either remain constant or increase
e. either remain constant or decrease

Purchase this Solution
Solution Summary

Jamie deposits $1,000 into an account paying 6 percent interest, compounded annually. At the same time, Amy deposits $1,000 into an account paying 3 percent interest, compounded annually. Over a 5 year period...

Solution Preview

1. Jamie deposits $1,000 into an account paying 6 percent interest, compounded annually.At the same time, Amy deposits $1,000 into an account paying 3 percent interest, compounded annually. Over a 5 year period,
a. both Jamie and Amy will earn the same amount of interest.
b. Jamie will earn exactly twice the amount of interest that Amy earns.
c. Amy will earn exactly twice the ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
Recent Feedback
  • "Your explanation to the answers were very helpful."
  • "What does 1 and 0 means in the repair column?"
  • "Went through all of the formulas, excellent work! This really helped me!"
  • "try others as well please"
  • "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."
Purchase this Solution
Free BrainMass Quizzes
Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

View More Free Quizzes
Related BrainMass Solutions

  • Finance problems - Invested money compounded annually

    If $1,000 is invested today into an account earning 5.75 percent interest compounded monthly, how much is it worth in 10 yrs?

  • Multiple Choice

    e. increasing annual amount due to the effects of the simple interest rate. 9. Sancho deposits $500 in a bank account today which pays 4 percent interest, compounded annually.

  • annual rate

    2.Deposits of $1,000, $1,100 and $680 were made into a savings account, the first two years ago, the second 18 months ago, the third 6 months ago. How much is in the account now if the interest on all deposits is 12% compounded semi-annually?

  • Time Value of Money

    How much money will William have in five years if he places $2500 into a CD earning an annual interest rate of 7.5% compounded annually? 3.

  • econmcs: Time value of money

    Timmie deposited $10,000 into an account that pays 9% compounded monthly. If she makes no deposits or withdrawals, what will be the balance in 3 years? 8.

  • Corporate Finance

    2..Your brother, who is 6 years old, just received a trust fund that will be worth $25,000 when he is 21 years old. If the fund earns 10 percent interest compounded annually, what is the value of the fund today?

  • Park & Jason, Inc.

    If an employee deposits $20 at the end of each month into his company's plan which pays 6% interest compounded monthly, how much will he have in the account at the end of 5 years?

  • Financial Calculator Input

    You place $25,000 in a savings account paying monthly compound interest of 6% for three years and then move the balance to another account that pays 9% compounded monthly. How much will you have after 3 more years have passed?

  • Multiple Choice Questions on Time Value of Money and Rate of Return

    Every three months, she deposits $500.00 in her bank account, which earns 4 percent annually but is compounded quaterly. On December 31, 2001, she used the entire balance in her bank account to invest in a contract that pays 9 annually.

View More Related Solutions