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k . Five banks offer nominal rates of 1 0 % on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D

k. Five banks offer nominal rates of 10% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. Assume 365 days in a year.
What effective annual rate does each bank pay? If you deposit $6,000 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? Round your answers to two decimal places.
A B C D E
EAR fill in the blank 35
10
% fill in the blank 36
10.25
% fill in the blank 37
10.38
% fill in the blank 38
10.47
% fill in the blank 39
10.51
%
FV after 1 year $ fill in the blank 40
6600
$ fill in the blank 41
6615
$ fill in the blank 42
6622.88
$ fill in the blank 43
6628.28
$ fill in the blank 44
6630.93
FV after 2 years $ fill in the blank 45
7260
$ fill in the blank 46
7293.04
$ fill in the blank 47
7310.42
$ fill in the blank 48
7322.35
$ fill in the blank 49
7328.21
If the TVM is the only consideration, what nominal rate will cause all of the banks to provide the same effective annual rate as Bank A? Round your answers to two decimal places.
B C D E
Nominal rate fill in the blank 50
9.76
% fill in the blank 51
9.65
% fill in the blank 52
9.57
% fill in the blank 53
9.53
%
Suppose you don't have the $6,000 but need it at the end of 1 year. You plan to make a series of deposits annually for A, semiannually for B, quarterly for C, monthly for D, and daily for E with payments beginning today. How large must the payments be to each bank? Round your answers to the nearest cent.
A B C D E
Payment $ fill in the blank 54
6000
$ fill in the blank 55
2928.54
$ fill in the blank 56
1175.16
$ fill in the blank 57
$ fill in the blank 58
Even if the five banks provided the same effective annual rate, would a rational investor be indifferent between the banks?
It is more likely that an investor would prefer the bank that compounded
more
frequently.

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