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Oumbou-Toumbou Bank of the Republic of Omeristan offers 4.5% nominal interest rate compound daily. If you deposit $13,278.00, what would be the value of your
Oumbou-Toumbou Bank of the Republic of Omeristan offers 4.5% nominal interest rate compound daily. If you deposit $13,278.00, what would be the value of your deposit's value in two years? Give the value to the last cent but no decimals of cents will be needed. A. $13,954.43 B. 14,473.02 C. 14,499.90 D. 14,528.37 Hunt: Consider that the year will have 365 days. No leap years need to be considered. Also, on the conceprof daily compounding, search how may apply on your credit cards. Exercise 2 (PV-FV): In the exercise above, determine the following: 1. What would be the value of the deposit in two years if no compounding was applied? A. S13.954.43 B. 14,473.02 C 14,499.90 D. 14.528.37 2. What is the actual observed percentage in the two years if considered as non compounding? A 4.4% B 4.5% C4.6% D 4.7% Exercise 3 (Risk): Unlike the case of Oumbou-Toumbou Bank, a Mariner, a local bank in Baltimore offers only 1.5% and it is not compounding. However, in year 2020, the economy of the Republic of Omeristan is doing really poorly. According to the Washington Post, there is a 5.00% risk that there will be a big crush of that economy and that bank to file for bankruptcy and all will be lost. At the same time, the local economy, is evidently quite robust with DOW Jones and NASDAC reaching levels unprecedented, making the risk of Mariner Bank to declare bankruptcy estimated at 0.02%. Which is the better option for you to deposit? A. Oumbou-Toumbou Bank B. Mariner Bank
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