1. Your bank is offering you an account that will pay 20% Interest (an effective two-year rate) in total for a two-year deposit. Determine the equivalent discount rate for the following periods:

a. Six months

b. One year

c. One month

(Note: Be careful not to round any intermediate steps less than six decimal places.)

2. You are considering two ways of financing a spring break vacation. You could put it on your credit card, at 17% APR, compounded monthly, or borrow the money from your parents, who want an interest payment of 9% every six months. Which is the lower rate?(Note: Be careful not to round any intermediate steps less than six decimal places.)

The effective annual rate for your credit card is?

(Round to two decimal places.)

3. You have found three investment choices for a one-year deposit:10.1%APR compounded monthly,10.1%APR compounded annually, and9.4%APR compounded daily. Compute the EAR for each investment choice. (Assume that there are 365 days in the year.) (Note: Be careful not to round any intermediate steps less than six decimal places.)

The EAR for the first investment choice is

%.

(Round to three decimal places.)