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3 years ago

You have just purchased a four-month, $630,000 negotiable CD, which will pay a 4.5 percent annual interest rate.

Business

1 answer:

erma4kov [3.2K]3 years ago

7 0

Answer:

A. cv = $628998.51

B. cv = $638180.86

Explanation:

Fv = iv * (1 + r)^n

Where fv = final value

Iv = initial value. = 630,000

r = rate = 4.5%

n = time of maturity = 4/12 = 0.3333

So therefore:

Fv = 630000(1 +.045)^0.3333

Fv = $639310.75

a. If rate is reduced to 5%

Current market value = c.f.

Since rise or drop in rate would affect the new value of product if you are to sell

So:

639310.75 = cv( 1 + r )^0.3333

cv = 639310.75 / (1.05)^0.3333

cv = 628998.51

b. If rate reduces to 4.25%

Solving it the same way as (a)

639310.75 = cv* ( 1 + 0.0425 ) ^0.3333

cv = $638180.86

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3 years ago

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3 years ago

On July 1 of the current calendar year, Olive Company paid $8,200 cash for management services to be performed over a two-year p

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2 years ago

Eddy Company is starting business and is unsure of whether to sell its product assembled or unassembled. The unit cost of the un

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Answer:

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