finance

posted by .

14. Assume Julian has a choice between two deposit accounts. Account A has an annual percentage rate of 7.55 percent but with interest compounded monthly. Account B has an annual percentage rate of 7.45 percent with interest compounded continuously. Which account provides the highest effective annual return? (Please calculate the arithmetic solution and show your work)

  • finance -

    first account:
    i = .0755/12 = .006291666..
    amount of $1
    = 1(1.006291666)^12 = 1.078168

    second account:
    amount of $1
    = 1 e^(.0745) = 1.07734

    What do you think?

  • finance -

    345

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. math

    find the effectivee rate correspoding to 3% compounded quarterly The formula for effective rate I found is (1+ i/n)^n - 1 where i is the annual rate as a decimal and n is the number of periods. Here i=.03 so the effective rate is and …
  2. Finance

    What is the effective annual rate on a certificate of deposit that promises to pay interest at a 6.6 percent rate, compounded monthly?
  3. Compound math

    (Future Value) Suppose you invest $8000 into an account that pays an annual interest rate of 6.2%. How much is in the account after 30 years if a. simple interest is compound monthly?
  4. math

    You receive $12,000 and looking for a bank to deposit the funds. Bank A offers an account with an annual interest rate of 3% compounded semiannually. Bank B offers an account with 2.75% annual interest rate compounded continuously. …
  5. math

    You receive $12,000 and looking for a bank to deposit the funds. Bank A offers an account with an annual interest rate of 3% compounded semiannually. Bank B offers an account with 2.75% annual interest rate compounded continuously. …
  6. Finance

    You receive $12,000 and looking for a bank to deposit the funds. Bank A offers an account with an annual interest rate of 3% compounded semiannually. Bank B offers an account with 2.75% annual interest rate compounded continuously. …
  7. Finance

    You receive $12,000 and looking for a bank to deposit the funds. Bank A offers an account with an annual interest rate of 3% compounded semiannually. Bank B offers an account with 2.75% annual interest rate compounded continuously. …
  8. Algebra

    Suppose that the annual interest rate on your checking account is 7.5 percent compounded continuously. In order to have $ 6300 in 7 years, how much should you deposit now?
  9. Finance

    Kim has money in a savings account that earns an annual interest rate of 4.1%, compounded monthly. What is the effective rate of interest on Kim's account?
  10. MATH HELP

    Ben Garrison invested $15,000 at 5% compounded daily in a credit union account that matures in 1 year. He also invested 20000 at 5.25% compounded monthly in a Silver Screen account that matures in 4 years. (a) What is the interest …

More Similar Questions