A bank offers a five-year escalating rate GIC, paying 2.5%, 2.75%, 2.85%, 3%, and 3.25% respectively, and compounded at the end of each year. How much interest will a $1,000 GIC earn?

Escalating Rate GIC

A Guaranteed Investment Certificate (GIC) where the interest rate increases at set intervals over the term of the investment.

Compounded Annually

A method of calculating interest where the interest is added to the principal at the end of each year, leading to compound growth.

Interest

The cost of borrowing money, where borrowers pay a fee to the lender for the money borrowed, typically expressed as a percentage of the principal.

Gain an understanding of compound interest concepts and their utilization in finance calculations.
Assess the final value and interest returns of diverse financial products like GICs, strip bonds, and savings bonds.

Verified Answer

Final Answer :

$151.96

Learning Objectives

Gain an understanding of compound interest concepts and their utilization in finance calculations.
Assess the final value and interest returns of diverse financial products like GICs, strip bonds, and savings bonds.