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dusya [7]
3 years ago
10

Assume that a one-year CD purchased for $1000 pays an APR of 10% that is compounded semi-annually. How much is in the account at

the end of each compounding period? (Calculate the interest and compound it each period rather than using the compound interest formula. Round your answers to the nearest cent.)
Business
1 answer:
vfiekz [6]3 years ago
6 0

Answer:

<u><em></em></u>

  • <em>At the end of the first compounding period: </em><u>$1,050.00</u>
  • <em>At the end of the second compounding period: </em><u>$1,102.50</u>

Explanation:

<u />

<u>1. First period:</u>

  • Investment: $1,000

  • <em>APR =  10%</em> = 0.1 compounded semi-annually.

  • <em>Semi-annually compound interest</em>: 0.1 / 2 = 0.05

  • Interest earned at the end of the first period: $1,000 × 0.05 = $50.00

  • Amount in the accoun at the end of the first period:

                                                        $1,000.00 + $50.00 = $1,050.00

<u>2. Second period</u>

  • Amount in the account beginning the second period: $1,050.00

  • Semi-annually compound interest: 0.1 / 2 = 0.05

  • Interest earned in the second period:

                                                      $1,050.00  × 0.05 = $50.00 = $52.50

  • Amount in the account at the end of the second period:

                                                     $1,050.00 + $52.50 = $1,102.50

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14,000 units

Explanation:

By the use of the cost volume analysis concept, the break-even point is obtained by dividing fixed costs by contribution margin per unit.

in this case,

fixed costs are $98,000

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contribution margin = $7 per unit

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