If you put $ 6,000 in a savings account that pays interest at the rate of 4 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put $ 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?
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An investor in the 28 percent tax bracket is trying to decide which of two bonds to select: one is a 5.5 percent U. S. Treasury bond selling at par; the other is a municipal bond with a 4.25 percent coupon, which is also selling