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What formula would I use for the following questions? . Numerical Examples Example 5-1: You currently have $2,000 on hand that you plan to use
What formula would I use for the following questions?
. Numerical Examples Example 5-1: You currently have $2,000 on hand that you plan to use to purchase a three-year bank certificate of deposit (CD). The CD pays 4% interest annually. How much money will you have when the CD matures? Pyr -2.000 PMT=0 ne 3 iu How would your answer change if the CD matures in five years rather than three years? 3 CPT FV: $ 2.249.73 2000 (1+0.04) - 2.249.73 What if the interest rate was 6% rather than 4% but the CD maturity was still three years? So, All else equel, when an increasss, FV increases when is increases, Ev increases Example 5-2: What amount must you deposit today in a three-year CD paying 4% interest annually to provide you with $2,249.73 at the end of the CD's maturity? How would your answer change if the CD matures in five years rather than three years? What if the interest rate was 6% rather than 4% but the CD maturity was still three years Step by Step Solution
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