Ask question

Ask question

All categories

nataly862011 [7]

2 years ago

6

Irene invested $27,000 in a twelve-year CD bearing 8.0% interest, but needed to withdraw $6,000 after three years. If the CD’s p

enalty for early withdrawal was eighteen months’ worth of interest on the amount withdrawn, when the CD reached maturity, how much less money did Irene earn total than if she had not made her early withdrawal? a. $3,600 b. $4,320 c. $720 d. $5,040
D IS THE ANSWER

2 answers:

stepladder [879]2 years ago

8 0

$5,040 since Irene earned nearly earned about $4,800 less than what she would be making if she did not make her early withdrawal.

Goryan [66]2 years ago

4 0

Answer:

Option D.

Explanation:

It is given that Irene invested $27,000 in a twelve-year CD bearing 8.0% interest.

Total interest = Principal × Rate × Time

Principal = $27,000

Rate = 8% = 0.08

Time = 12 years

$\text{Total interest}=27000\times 0.08\times 12=25920$

Irene earn total $25,920 if she had not made her early withdrawal.

If she withdraw $6000 after three years, then the total interest is

$\text{Total interest}=27000\times 0.08\times 3+(27000-6000)\times 0.08\times (12-3)$

$\text{Total interest}=6480+21000\times 0.08\times 9$

$\text{Total interest}=6480+15120=21600$

If the CD’s penalty for early withdrawal was eighteen months’ worth of interest on the amount withdrawn.

$\text{Penalty}=6000\times 0.08\times \frac{18}{12}=720$

$21600-720=20880$

Irene earn total $20880 if she had made her early withdrawal.

$25920-20880=5040$

Irene earn $5,040 less money if she had made her early withdrawal.

Therefore, the correct option is D.

You might be interested in

AlwaysRain Irrigation, Inc., would place for making bronze and plastic sprinklers. Three types of sprinklers are available in bo

Alex777 [14]

Answer:

The requirement for the next four years higher than the current available capacity.

Explanation:

AlwaysRain Irrigation, Inc., has 3 bronze machines and one injection molding. The bronze machine total available capacity is 60,000 / year which is calculated by 20,000 sprinkles * 3 machines.

For molding machine the available capacity for the year is 320,000 sprinkles per year.

The capacity requirement for next four years will be greater for bronze and the company needs to consider buying more machines.

8 0

2 years ago

Public Good Contribution: Three players live in a town, and each can choose to contribute to fund a streetlamp. The value of hav

givi [52]

Answer:

iahdiahoaihoiahfoaihfhoihfoisoishfoiafhoihsfoiahsfoisahoiahsoiahsaohfoaihsfoiashfoishosihoihsoihsoiasoihsoishoishoisfhioshosfhosfihosfihisohsoihoihosifhoifhhf

Explanation:

7 0

2 years ago

Stuart owns 300 shares of Turquoise Corporation stock and 2,000 shares of Blue Corporation stock. During the year, Stuart receiv

Crank

Answer:

The answer is: A) $0

Explanation:

I am assuming Stuart's stock is part of his retirement account. If this is true, then the stock dividends and stock splits are not taxed as they are earned (but they will be taxed later when Stuart starts receiving his distributions).

If Stuart's stock was not part of his retirement account, then he would have to pay taxes (usually a 15% tax rate applies).

5 0

2 years ago

Read 2 more answers

Northern Organic Farms is considering a project which will produce annual sales of $975,000 and increase cash expenses by $848,0

stealth61 [152]

Answer:

B) $114,000

Explanation:

To calculate the operating cash flows using the top down approach we can use the following equation:

operating cash flow = increase in total sales - increase in total expenses - increase in taxes paid

operating cash flow = $975,000 - $848,000 - ($154,000 - $141,000) = $975,000 - $848,000 - $13,000 = $114,000

I didn't include depreciation since it is normally included to calculate the increase in taxes but taxes were already given.

5 0

2 years ago

Your grandfather made an investment of $4,000 the day you were born, as such starting to earn returns immediately. His assumptio

weeeeeb [17]

Answer:

$Acumulated value=57,775.84$

Explanation:

this problem can be solved applying the concept of annuity, keep in mind that an annuity is a formula which allows you to calculate the future value of future payments affected by an interest rate.by definition the future value of an annuity is given by:

$s_{n} =P*\frac{(1+i)^{n}-1 }{i}$

where $s_{n}$ is the future value of the annuity, $i$ is the interest rate for every period payment, n is the number of payments, and P is the regular amount paid

But there is an special thing to keep in mind and is the initial payment so we must to calculate the 4,000 in the future so we have:

$Acumulated value=s_{n} +P*(1+i)^{n}$

$Acumulated value=1,500*s_{18} +4,000*(1+0.06)^{18}$

$Acumulated value=57,775.84$

3 0

2 years ago