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Suppose the current interest rate you can earn on a bank account is 2.5%. Your bank plans to raise the interest rate by 0.75% each
Suppose the current interest rate you can earn on a bank account is 2.5%. Your bank plans to raise the interest rate by 0.75% each month until your bank account yields 5.5%. This means the annualized rate you earn for the first month will be 2.5%, then you will earn a 3.25% annualized rate over the second month, and so on. At the end of the month in which your bank account first earns a 5.5% annualized rate, what will be the value of your account if the current balance is $100? Assume the interest is compounded continuously.
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