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21 June, 08:48

Consider the $50,000 excess cash. Assume that Gary invests the funds in a one year CD

a. What is the CD s value at maturity (future calue) if it pays 10 percent (annual) interest?

b. What will its future value be if the CD pays 5 percent interest? If it pays 15 percent interest?

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Answers (1)
  1. 21 June, 09:23
    0
    By calculating interest at 10% for 1 year on CD

    Interest = 50,000 * 10 * 1/100

    Therefore future value = 50,000 + Interest

    = 55000

    Similary at 5%, future value is 52500

    and at 15%, future valuer is 57500
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