Calculate the maturity value of the five-year compound-interest GIC whose interest rate for each year is given. Also calculate the dollar amount of interest earned in the fourth year.

Compound-Interest GIC

A Compound-Interest Guaranteed Investment Certificate is a type of investment where the interest earned is reinvested and earns interest itself, over the term of the GIC.

Maturity Value

Maturity Value is the amount payable to an investor at the end of a fixed-term investment, including the principal and the interest earned.

Dollar Amount

A numerical value specifying an amount of money in terms of the dollar currency.

Acquire knowledge about the fundamentals of compound interest and its implementation in financial math.
Estimate the maturity amount and interest profits of various investment vehicles like GICs, strip bonds, and savings bonds.

Verified Answer

Christina RisteenJun 17, 2024

Final Answer :

$2,445.03; $92.51

Learning Objectives

Acquire knowledge about the fundamentals of compound interest and its implementation in financial math.
Estimate the maturity amount and interest profits of various investment vehicles like GICs, strip bonds, and savings bonds.

Calculate the maturity value of the five-year compound-interest GIC whose interest rate for each year is given. Also calculate the dollar amount of interest earned in the fourth year.

Definitions

Learning Objectives

Learning Objectives

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