Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A term deposit scheme offers 6.5% annual interest compounded yearly and payable at maturity over 55 years, for a deposit of $500,000 or above. After

A term deposit scheme offers 6.5% annual interest compounded yearly and payable at maturity over 55 years, for a deposit of $500,000 or above. After 22 years, the depositor may at any time withdraw the deposit before maturity but will forego half of the gain. Mr. Lucky invested $1 million in the scheme and withdrew his deposit after 33 years. What were Mr. Lucky's net gain and the percentage of annual interest he benefited from the scheme?

Net gain of $207,950 at an annual interest of 3.9%

Net gain of $69,317 at an annual interest of 2.26%

Net gain of $103,975 at an annual rate of 3.35%

Net gain of $207,950 at an annual rate of 6.5%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations Of Financial Markets And Institutions

Authors: Frank J. Fabozzi, Franco Modigliani, Michael G. Ferri

2nd Edition

0136860567, 9780136860563

More Books

Students also viewed these Finance questions