Savings Accounts and Short-Term GICs参考.ppt

Chapter 7 Applications of Simple Interest 7.1 Savings Accounts and Short-Term GICs Example 7.1 A Saving Account Interest Based On A Graduated Interest Rate. Mr. And Mrs. Hernandez have a Performance 55 bank account that pays a slightly higher rate to depositors age 55 or older. Interest is calculated on the daily closing balance and paid monthly as follows: portion of balance interest rate from 0 to $1000.00 1.50% from $1000.01 to $3000.00 1.75% over $3000.00 2. 0% On April 1 their balance was $1416.32. They withdrew $500 on April 9, deposited $1200 on April 15, and deposited another $1200 on April 29. Calculate the interest that they will be paid for the month of April. From April 1 to 8 ,the exact number of days is (8-1+1)=8 days. I= p1r1t+p2r2t From April 9 to 14,the exact number of days is (14-9+1)=6 days I=prt Similarly: I(April 15-28) I(April 29-30) Total interest for April=$2.348 Example 7.1 B Calculation Of Interest On Short-term GICs For amounts of $5000 to $99,999 and terms of 90 to 179 days, the RBC Royal Bank pays an interest rate of 2.7% pa on redeemable GICs and 2.95% on non-redeemable GICs. In order to retain the redemption privilege, how much interest (in dollars) must Edith sacrifice on an investment of $25000 for 150 days? Solution: * * Savings accounts interest often calculated on daily balance and posted monthly Have a graduated scale of interest rate The interest rates are floating Short-Terms GICs Guaranteed Investment Certificate nonredeemable - the investor cannot cash-in a GIC before its maturity date redeemable - the investor can cash-in a GIC before its maturity date Interest is calculated on a simple-interest basis and is paid on the maturity date. P--251 Solution: Mr. And Mrs. Hernandez will earn $2.348 interest in April. Edith must sacrifice $25.68 of