Case 12

1) 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 BankSouth
Nominal Effective Nominal Effective
Savings 4.00% 4.08% 4.10% 4.18%
CDS 6.00% 6.17% 6.10% 6.10%
Term Loan 8.00% 8.24% 8.06% 8.22%
The effective rate of the interest of Sun Trust bank is higher for all the products. Gary should
choose Sun Trust bank for saving account and certification of deposit and BankSouth for term
loans.
2) 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?
Donatio Future Value @ Future Value
year ns 6.17% donation
$250,0
0 00 2.05127 $512,816.30
$75,00
1 0 1.93206 $144,904.29
$75,00
2 0 1.81978 $136,483.28
$75,00
3 0 1.71402 $128,551.64
$75,00
4 0 1.61441 $121,080,.95
$75,00
5 0 1.52059 $114,044,.41
$75,00
6 0 1.43222 $107,416.79
$150,0
7 00 1.34899 $202,348.67
$150,0
8 00 1.27060 $190,589.31
$150,0
9 00 1.19676 $179,513.31
$150,0
10 00 1.12721 $169,081.03
$150,0
11 00 1.06170 $159,255.00
$150,0
12 00 1.00000 $150,000.00
Future Value $2,316,084,98
The future value of accumulated donations on the day of last donation will be $2,316,084.98.