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A bank advertises it pays 4 % annual interest, compounded daily, on savings accounts, provided the money is left in the account for 5 years.

A bank advertises it pays

4 %

annual interest, compounded daily, on savings accounts, provided the money is left in the account for

5

years. What is the effective annual interest rate?

At the Central Furniture Company, customers who buy on credit pay an effective annual interest rate of

16.1 %,

based on monthly compounding.

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