Your money market fund pays 3% interest annually, compounded continuously. a. If you deposit $100,000 into the

Question:

Your money market fund pays 3% interest annually, compounded continuously.

a. If you deposit $100,000 into the fund today and the 3% interest rate holds for the next 10 years, how much will you have in 10 years?

b. What is your effective annual interest rate (EAIR) on the fund?

(Although you don’t need it to answer this question, you may want to remind yourself what the EAIR is by reviewing Chapter 5.)

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