Question
Tony plans to invest $23,000 for 360 days into a GIC. Tony has two options: Option A: Invest the money in a 360-day GIC at
Tony plans to invest $23,000 for 360 days into a GIC. Tony has two options:
- Option A: Invest the money in a 360-day GIC at 5.1% simple interest.
- Option B: Invest the money in a 180-day GIC at 3.8% simple interest and then re-invest the maturity value from the first 180-day GIC into another 180-day GIC.
- If Tony chooses Option A, what is the maturity value at the end of the 360-day GIC?
Suppose Tony selects Option B.
What interest rate does the second 180-day GIC need so that Tony receives the same maturity value as the 360-day GIC?
Step by Step Solution
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Step: 1
Option A Maturity Value Principal x 1 Interest Rate x Time Maturity Value 23000 x 1 0051 x 360365 Ma...
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
