The Maturity Value of a $5,000 Four-Year Compound- Interest GIC

question 286

Short Answer

The maturity value of a $5,000 four-year compound- interest GIC was $5,839.72. What quarterly compounded rate of interest did it earn?

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Definitions:

Collection Time

The average amount of time it takes for a business to receive payments owed by its customers after a sale has been made, indicative of a company's efficiency in collecting accounts receivable.

Short-term Securities

Securities that typically mature in one year or less, often used for investment with lower risk and short-duration goals.

Zero Balance Accounts

Bank accounts that automatically maintain a zero balance by moving funds from a master account in an amount only large enough to cover checks presented.

Master Account

A primary account that is used to manage multiple sub-accounts under a single umbrella, often for purposes of consolidation and easier management.