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Setler [38]
2 years ago
9

Dixie Bank offers a certificate of deposit with an option to select your own investment period. Jonathan has ​$8 comma 000 for h

is CD investment. If the bank is offering a 6 ​% interest​ rate, compounded​ annually, how much will the CD be worth at maturity if Jonathan picks a a. two ​-year investment​ period? b.  six ​-year investment​ period? c.  ten ​-year investment​ period? d.  fifteen ​-year investment​ period?
Business
1 answer:
Marizza181 [45]2 years ago
3 0

Answer:

A = P * (1 + r/n)^nt. Where A = Maturity amount = ? P = Principal amount = $8,000, r = Rate of interest = 6%, n = Number of compounding per year = 1, t = Number of year

a. t = 2

A = $8,000 * (1 + 0.06/1)^1*2

A = $8,000 * (1.06)^2

A = $8,000 * 1.1236

A = $8,988.80

b. t = 6

A = $8,000 * (1 + 0.06/1)^1*6

A = $8,000 * (1.06)^6

A = $8,000 * 1.418519

A = 11348.152

A = $11,348.15

c. t = 10

A = $8,000 * (1 + 0.06/1)^1*10

A = $8,000 * (1.06)^10

A = $8,000 * 1.7908477

A = 14326.7816

A = $14,326.78

d. t = 15

A = $8,000 * (1 + 0.06/1)^1*15

A = $8,000 * (1.06)^15

A = $8,000 * 2.3965581931

A = 19172.4655448

A = $19,172.47

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3 years ago
A registered representative with a wealthy clientele has many clients that are officers of publicly held companies. The register
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Answer:

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Explanation:

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2 years ago
The Diamond Outlet has current earnings per share of $1.96 and an expected earnings growth rate of 2.2 percent. The required ret
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Answer:

the current market value of this stock is $15.96

Explanation:

given

current earnings = $1.96 per share

growth rate = 2.2 percent

return on the stock = 13 percent

current book value = $12.70 per share

solution

first we get here return on equity that is

return on equity = [ current earning per share × ( 1 + growth ) ] ÷ book value per share     ....................1

return on equity = \frac{1.96 + (1+0.022)}{12.70}  

return on equity =15.77 %

and

now we get here payout ration that is

growth rate = retention ration × ROE      ....................2

put here value

2.2% = (1 - payout ratio ) × 15.77

payout ratio  = 86.05 %

and

now we get here current dividend per share that is

current dividend per share = current earning per share × payout ratio  ...........3

put here value

current dividend per share = 1.96 × 86.05 %

current dividend per share = $1.6865

and

now we get here current market value  

current market value  =  [ current dividend per share × ( 1 + growth ) ] ÷ [ required return - growth rate]     ....................1

current market value  = [Text]\frac{1.6865 \times (1+0.022)}{0.13-0.022}[text]

current market value  = \frac{1.6865 \times (1+0.022)}{0.13-0.022}

current market value = $15.96

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