Consider the conditions of this deposit at this bank: Quoted interest rate of 3.45% compounded monthly for
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Question:
Consider the conditions of this deposit at this bank: Quoted interest rate of 3.45% compounded monthly for the first 4 months. After that a regular interest rate of 1.19% compounded monthly, will be applied.
a) Show that the quoted interest rate of 3.45% compounded monthly is the same as the effective annual interest rate of 3.5%.
b) What would be the effective annual rate for a one-year deposit?
c) What would be the effective annual rate for a two-year deposit?
d) What would be the effective annual rate for a 10-year deposit?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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