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Question 1) 1 pts Celesta Frank wants to go on a cruise in three years
Question 1) 1 pts Celesta Frank wants to go on a cruise in three years. She could earn 8.25 percent compounded monthly in an account if she were to deposit the money today. She needs to have $12,000 in three years. How much will she have to deposit today? (Round to the nearest dollar.) O
$9,504
$9,589 O
$9,307 O
$9,377
Question 2)1 pts Dynoxo Textiles has a cash inflow of $2 million, which it needs for a long-term investment, at the end of one year. It plans to deposit the money in a bank CD that pays daily interest at 7.50 percent. What will be the value of the investment at the end of the year? (Round to the nearest dollar.) O
$2,113,072 O
$2,155,752 O
$2,134,306
$2,031,103
Expert Solution
Interest rate : 8.25% compound monthly
Time: 3 years
Amount after 3 years : $ 12,000
Deposit after 3 year : Deposit today ( 1 + Rate of interest) time
Deposit today : Deposit after 3 year / ( 1 + Rate of interest) time
Deposit today : $ 12,000 / ( 1 + 0.0825/12) 3*12
( Since interest compound monthly, we devide interest rate by 12 and multiply years by 12)
Deposit today : $ 12,000 / ( 1.006875) 36
Deposit today : $ 9,376.94 or $ 9,377
Hence, correct answer is $ 9,377
Cash Today: $ 2,000,000
Time : 1 year
Interest Rate: 7.5% daily compounded
Deposit after 1 year : Deposit today ( 1 + Rate of interest) time
Deposit after 1 year : $ 2,000,000 * ( 1 + 0.075/365)1*365
(Since interest compound daily, we devide interest rate by 365 and multiply year time by 365)
Deposit after 1 year : $ 2,155,752
Hence, correct answer is $ 2,155,752
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