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SW 5 Problem No. 33

The document contains a math problem to determine how often interest is compounded based on advertised and actual annual yield rates. It is given that accounts are advertised as yielding 9.5% but actually yield 9.84% annually. Using the interest formula, it is determined that the interest must be compounded quarterly (4 times a year) for the actual annual yield (9.84%) to match the results calculated from the advertised rate (9.5%) compounded over 4 periods. Therefore, the answer is d (quarterly).

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Javadd Kilam
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4K views

SW 5 Problem No. 33

The document contains a math problem to determine how often interest is compounded based on advertised and actual annual yield rates. It is given that accounts are advertised as yielding 9.5% but actually yield 9.84% annually. Using the interest formula, it is determined that the interest must be compounded quarterly (4 times a year) for the actual annual yield (9.84%) to match the results calculated from the advertised rate (9.5%) compounded over 4 periods. Therefore, the answer is d (quarterly).

Uploaded by

Javadd Kilam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Problem No.

33

A bank is advertising 9.5% accounts that yield 9.84% annually. How often is the interest compounded?

a.daily b. monthly c. bimonthly d. quarterly

Given:

9.5% accounts that yield 9.84 annually

Required:

How often is the interest compounded?

Solution:

ER = (1+i)m-1

n=1

0.095 m
9.84%=(1+ ) -1
m

0.095 4
(1+ ) -1= 0.098
4

m=4

Final Answer:

The interest compounded is quarterly – LETTER D

Problem No.33

A bank is advertising 9.5% accounts that yield 9.84% annually. How often is the interest compounded?

a. daily b. monthly c. bimonthly d. quarterly

Given:

9.5% accounts that yield 9.84 annually

Required:

How often is the interest compounded?

Solution:

ER = (1+i)m-1

n=1
0.095 m
9.84%=(1+ ) -1
m

0.095 4
(1+ ) -1= 0.098
4

m=4

Final Answer:

The interest compounded is quarterly – LETTER D

Problem No.33

A bank is advertising 9.5% accounts that yield 9.84% annually. How often is the interest compounded?

a. daily b. monthly c. bimonthly d. quarterly

Given:

9.5% accounts that yield 9.84 annually

Required:

How often is the interest compounded?

Solution:

ER = (1+i)m-1

n=1

0.095 m
9.84%=(1+ ) -1
m

0.095 4
(1+ ) -1= 0.098
4

m=4

Final Answer:

The interest compounded is quarterly – LETTER D

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