Certificate of Deposit

Archive for the ‘Certificate of Deposit’ Category

Question: How do you report CD redemptions on tax form?

my brokerage accounts report Certificate Of Deposit redemptions on form 1099 B. Is it necessary to report these since we already have reported interest income elsewhere.

Answer: To avoid any questions or hassle, if they’re reported on a 1099 B you might want to list them on a schedule D, with the sales price and cost the same. Your interest that you got, of course, goes on the interest line of your 1040.

Question: Exponential growth problem?

Ten years ago your friend invested in a plot of land with the idea of eventually building a summer cottage on it. His plan was to place a “nest egg” of $12,000 in a long term Certificate Of Deposit which paid 8% interest over a period of 20 years, compounded monthly. At the end of the 20 years, he would use the money to build the cottage.
The problem was the plot had 8 prairie dogs on it 10 years ago when he acquired the ground.
This year he made a count of the prairie dogs and found there were 102 on the same plot! A biologist friend assured him that the prairie dogs were growing exponentially according to the law of natural growth, and something needed to be done.
So….
1) What would be the FORMULA for the exponential growth of the prairie dog population.
2)approximately how many years from now will the population reach 365 prairie dogs.
3) approximately how large the population will be 10 years from now

Answer: Just when I thought you were talking about a compounding interest problem…

1) Let P(t) be the prairie dog population, where t is in years, with t=0 corresponding to the time that he acquired the property. Then P(t)=8*exp(kt), where k needs to be determined.

To find k, use P(10)=102. Then 102=8*exp(10t), or 12.75=exp(10k).

Take the natural log of both sides:
ln 12.75 = 10k, so k=(ln 12.75)/10=0.25455.

Therefore, P(t)=8*exp(0.25455t).

2) Solve the equation 365=8*exp(0.25455t) for t. Start with

365/8=exp(0.25455t)
Take ln:
ln 45.625=0.25455t
Divide:
t=(ln 45.625)/0.25455=15.0085 years. But that’s since the time he acquired the property 10 years ago, so it’s about 5 years from now.

3) Plug t=20 into the formula for P(t), since 10 years from now is 20 years from the time the property was acquired.

Question: I found an old stock certificate. How do I find how much it’s worth today?

In a savings deposit box I was recently informed about, there was a stock certificate from 1983 for 25 shares of “GLEN” (formerly Glendale Federal Bank). It looks like Glendale has gone through a number of mergers/acquisitions. I’m not sure who the main company is today – it’s so confusing. Is it worth zero now or can I retire? Thank you, in advance, for any help/direction you may be able to provide!

Answer: Neither. It’s not worth enough for you to retire on, but it’s not worthless either. Basically, you own shares now in Citigroup. Contact them at:

Citigroup Shareholder Relations
P. O. Box 990041
Hartford, CT 06199-0041

[email protected]

Ask them how many shares of Citigroup stock (C) your GLEN shares are worth.

ADOPTED!!Adopt Marlee!.mpg