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3 years ago

Describe the advantages and disadvantages of using a certificate of deposit (cd) to save money.

Business

1 answer:

Troyanec [42]3 years ago

8 0

Explanation:

Advantages of a CD

Flexible Terms: The terms and the amounts that can be deposited into a CD are flexible. If you are not willing to tie up your money for a long time, you can easily opt for a shorter term. At the end of a CD term, you can renew that CD or start a new one.

Safety: CDs that are available from a federally insured institution are generally insured up to $250,000. This takes much of the risk out of the investment.

Better Return Than Saving Accounts: Since the CD holder is not allowed to withdraw money freely like savings account holders, a CD is often more valuable to the financial institution. For this reason, the interest rate offered to a CD holder is higher than a traditional savings account.

Wide Selection: You can get a CD at various maturities and terms from different financial institutions. Because of the diversity of CDs, investors can find a CD that meets their individual needs.

Fixed, Predictable Return: The investor can be sure about getting a specific yield at a specific time. Even if the interest rates come down to a broader economy, the CD rate will remain constant. You will be able to easily determine the rate at which your balance will grow, thus making financial planning easy.

Disadvantages of a CD

Limited Liquidity: The owner of a CD cannot access their money as easily as a traditional savings account. To withdrawal money from a CD before the end of the term requires that a penalty has to be paid. This penalty can be in the form of lost interest or a principal penalty. To increase flexibility, the investor can create a CD Ladder, which is composed of CDs with different maturity dates and terms. With a laddering strategy, you have more options to access your CD savings at different intervals of time.

Inflation Risk: CD rates may be lower than the rate of inflation. This means that your money may lose its purchasing power over time if interest gains are outdone by inflation rates.

With these advantages and disadvantages in mind, it is wise to consider that CD advantages usually outweigh the disadvantages. CDs allow you to grow your savings without hassle. You can easily compare different types of CDs with the help of online resources, and you can find one that best suits your needs.

Summary of Certificates of Deposits

Certificates of Deposit (CD) are useful for people looking for a way to save money while earning a relatively high interest. This not only helps you save money, but also earns you interest without requiring any effort on your part. The disadvantages of CD’s are minor and typically outweighed by their

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Cheyenne Corp. purchased a piece of equipment for $58,800. It estimated a 9-year life and $3,400 salvage value. At the end of ye

bogdanovich [222]

Answer:

the revised depreciation is $ 3,753

Explanation:

Straight Line Method of Depreciation charges the same amount of depreciation over the useful life of the asset.

Depreciation Charge (Straight line) = (Cost - Salvage Value) / Useful life

Year 1

Depreciation Charge = ( $58,800 - $3,400) / 9 years

= $6,156

Year 2

Depreciation Charge = $6,156

Year 3

Make the adjustment as if the adjustment happened at the beginning of the year

Make the following changes

(1) Adjast the Depreciable Amount (numerator)

(2) Adjast the Useful life (denominator) to 11 years

Depreciation Charge = (Cost - Previous Depreciation Charges - New Residual Value) / Revised Number of Useful life

Depreciation Charge = ($58,800 - $6,156 - $6,156 - $5,200)/ 11 years

= $ 41,288/ 11 years

= $ 3,753

5 0

3 years ago

A consumer product for which buyers will not accept a substitute, for which purchasers do not compare alternatives, and that is

Vladimir79 [104]

Full question:

A consumer product for which buyers will not accept a substitute, for which purchasers do not compare alternatives, and that is purchased infrequently and with extra effort on the buyer's part is a ____ product.

A. luxury

B. business

C. Specialty

D. Shopping

E. Convenience

Answer:

Explanation:

A specialty product is a commodity that some customers will actively attempt to buy because of unprecedented features or adherence to a particular brand. Customers who endeavor specialty products know what they require and will consume time and attempt to take it.

Typically, these customers will not readily acquire replacement products. Some companies only market specialty products that promote other products in the market. Specialty products in this range are sold to request to consumers want to individualize what they previously have.

5 0

3 years ago

Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 70:30 basis, respectively

Usimov [2.4K]

Answer:

Alex and Bess Partnership

Part A: Step-by-step Distribution:

Cash Noncash assets Liabilities Alex Bess

December 31 $48,000 $135,000 $36,000 $94,500 $52,500

Safe cash

distribution (26,400) 0 0 (18,480) (7,920)

1st Liabilities (21,600) 0 (21,600) 0 0

Sale of noncash 147,000 (135,000) 8,400 3,600

Safe cash distrib. (100,000) (70,000) (30,000)

Final liabilities (14,400) 0 (14,400) 0 0

Liquidation expense (4,100) 0 (2,870) (1,230)

Final distribution (28,500) 0 (11,550) (16,950)

Part B: Final Statement of Partnership Liquidation:

Cash Noncash assets Liabilities Alex Bess

December 31 $48,000 $135,000 $36,000 $94,500 $52,500

Sale of noncash 147,000 (135,000) 8,400 3,600

Payment of liabilities (36,000) (36,000)

Liquidation expenses (4,100) 0 (2,870) (1,230)

Distribution (154,900) 0 0 (100,030) (54,870)

Explanation:

a) Data and Calculations:

Profits and losses sharing ratio = 70:30

Estimated liquidation expenses = $5,500

Balance Sheet at Liquidation Date:

Cash $48,000 Liabilities $36,000

Noncash assets 135,000 Alex, capital 94,500

Bess, capital 52,500

Total assets 183,000 Total liabilities and capital $ 183,000

3 0

3 years ago

How can producers maximize their profit?

Alina [70]

Answer:

the best possible answer is keep the marginal costs below marginal revenue.

7 0

3 years ago

An overgrown lawn is manicured by mowing it with a lawn mower is an example of

Marta_Voda [28]

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4 years ago