Meredith Becker was born in Charleston, South Carolina, but she traveled upstate to earn a bachelor’s degree in business from Clemson University. After graduation, she obtained a job at the Medical University of South Carolina (MUSC) and subsequently received her master’s degree from MUSC’s executive MHA program. After six years at MUSC with a wide variety of successful assignments, Meredith became chief operating officer of Charleston Painless Surgery Center (CPSC), a specialty surgery center owned by six physicians.
Soon after starting at CPSC, Meredith found herself facing a series of decisions involving time value analysis. You are to assume the role of her MHA intern and see how you, with the tools available in Microsoft Excel, can help her with these decisions.


Questions

b. Big Bank offers a CD with 3 percent nominal (stated) interest that is compounded monthly. What is the effective annual rate on this CD? (Hint: Use Excel’s “Effect” function.) What will the value be in three years if the $100,000 is invested in this CD? (Hint: Use Excel’s “FV” function.)