Washington-pacific invested $4 million to buy a tract of land and plant some young pine trees. the trees can be harvested in 10 years, at which time w-p plans to sell the forest at an expected price of $8 million. what is w-p’s expected rate of return?
universal bank pays 7% interest, compounded annually, on time deposits. regional bank
pays 6% interest, compounded quarterly.
a. based on effective interest rates, in which bank would you prefer to deposit your money?
b. could your choice of banks be influenced by the fact that you might want to
withdraw your funds during the year as opposed to at the end of the year? in
answering this question, assume that funds must be left on deposit during an entire
compounding period in order for you to receive any interest.