# Student need math help

• Jan 8th 2009, 09:17 AM
Kenny7
Student need math help
(Hi) Hi! this is Gregory and I need some help with my Math assignment. I really need help on this assignment especially #3 of this assignment. I have try to get it started, but I need to know if I am on the right track. Please help me, Thanks.

Envision that you have served as business manager of Media World for over 2 years. You have noticed that for the last 12 months the business has regularly had cash assets of \$20,000 or more at the end of each month. You have found a 6-month certificate of deposit that pays 6% compounded monthly. To obtain this rate of interest, you must invest a minimum of \$2,000. You have also found a high interest savings account that pays 3% compounded daily. Based on the cash position of the business at this time, assume that you decide to invest \$4,000.

1. Assume that you will invest the full amount in a certificate of deposit.

a. What would be the future value of the CD at the end of the investment term?

1a) A= FV + P (1+i) n
\$ 4,000 x (1 + 1)6= \$ 4,000 x 64
FV= \$ 256,000

b. How much interest would the investment earn for the period?

b) I= PRT
= \$4,000 x .06 x 6/12= \$120

c. What would be the effective rate of the investment?

c) A= P (1+i) n
P= \$4,000
\$ 4,000(1 + .06/4)4
= 1.061363551 -1
Reff = .061363551
Reff = 6.14%

2. Assume that you decide to invest the \$4,000 in the high-interest savings account.

a. What future value would you expect to receive at the end of 6 months?

2a) A= FV + P (1 + i) n
\$4,000 + (1 +1)3 = \$4,000 x 8
FV = \$32,000

b. How much interest would the investment earn for the period?

b) I = PRT
I = \$ 4,000 x .03 x 6/12 = \$60

c. What would be the effective rate of the investment?

c) A = P (1 + i) n
\$4,000(1 + .03/4)4
= 1.030339191 -1
Reff = .030339191
Reff = 3.03%

3. Write a recommendation to the partners justifying a short-term investment of business funds at this time, recommending one of these investments. Include your analysis from questions 1 and 2 in your recommendation.