What are the PMT?

k. 5 banks offer nominal rates of 6%, but differ in their compounding frequency. A = annually; B = semiannually; C = quarterly; D = monthly; and E = daily. I NOM A B D E 6% Deposit $5,000 (1) (i) EAR (ii) Deposit $5,000. What is FV,? (iii) Deposit $5,000. What is FVZ? 6.18% 6.00% $5,300 6.09% $5,305 $5,628 6.14% $5,307 $5,632 6.17% $5,308 $5,636 $5,309 $5,618 $5,637 (2) Would they be equally able to attract funds? No. People would prefer more compounding to less. (i) What nominal rate would cause all banks to provide same EAR as Bank A? A B D 6.00% 5.91% 5.87% 5.84% E INOM 5.83% Each of these nominal rates based on the frequency of compounding will provide an EAR of 6%. (3) You need $5,000 at the end of the year. How much do you need to deposit annually for A, semiannually, for B, etc. beginning today, to have $5,000 at the end of the year? A B PMT D E