Exam (elaborations)
Solution shores surgery centers time value analysis
- Course
- HSA 6177
- Institution
- Chamberlain College Of Nursing
% SunTrust Nominal EAR Savings Daily 4% 4.08% CD Monthly 6% 6.17% Term Loan Qtryly 8% 8.24%
[Show more]
Content preview
Solution shores surgery centers time value analysis1. Which bank should Gary choose for a saving account, which bank for a certificate of deposit,
and which bank for a term loan?
Sun Trust :
Savings Effective Annual Rate EAR = (1+4%/365)^365-1 = 4.08%
CD EAR = (1+6%/12)^12-1 = 6.17%
Term Loan EAR = (1+8%/4)^4-1 = 8.24%
BankSouth:
Savings Effective Annual Rate EAR = (1+4.10%/52)^52-1 = 4.18%
CD EAR = (1+6.10%/1)^1-1 = 6.10%
Term Loan EAR = (1+8.06%/2)^2-1 = 8.22%
EAR is tabulated below.
So For Savings, Gary should choose BankSouth gives highest EAR = 4.18%
For CD, Gary should choose SunTrust with EAR =6.17%
For Term Loan, Gary should choose BankSouth with Lowest EAR = 8.22%
SunTrust Nominal EAR
Savings Daily 4% 4.08%
CD Monthly 6% 6.17%
Term Loan Qtryly 8% 8.24%
Solution shores surgery centers time value analysis
, Solution shores surgery centers time value analysis
Bank South
Savings Week 4.10% 4.18%
CD Annual 6.10% 6.10%
Term Loan SemiAnnu 8.06% 8.22%
1. Gary will invest the donations from a wealthy investor in CDs. How much will the Center
have accumulated on the day of the last donation? (Use the CD interest rate offered by the
bank you selected for a CD in question 1.)
SunTrust CD EAR = 6.17%. Investment will be as below :
CD Investment
t0 $250,000
t1-t6 $ 75,000
t7-t12 $150,000
We first calculate the Maturity of $250,000 invested for 12 Yrs at 6.17%
So FV(t0) = 250,000*(1+6.17%)^12 = $512,688
Next we have t1-t6 = Annual Investment of $75,000 & then t7-12 of $150,000
So We can restate that t1-t12, Annual Investment of $75,000 & t7-t12 of $75,000
So Maturity of Annual Investment of $75,000 for 12 yrs at 6.17% will be
Solution shores surgery centers time value analysis
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller MasterGrade. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79976 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now