Answered

IDNLearn.com provides a reliable platform for finding accurate and timely answers. Find reliable solutions to your questions quickly and easily with help from our experienced experts.

1. A bank account pays 0.5% monthly interest.a. If $600 is put in the account, what will the balance be at the end of one year, assuming no additionaldeposits or withdrawals are made?b. What is the effective annual interest rate?c. Is the effective annual interest rate more or less than 6% (the nominal interest rate)?

Sagot :

a. 637.007$

b. 0.5%

c. Less than the nominal interest rate

Explanation & Steps:

a.

[tex]600\cdot(1.005)^{12}\text{ }\cong637.006687\text{ }\cong\text{ 637.007\$}[/tex]

b.

[tex]\begin{gathered} (1+(\frac{0.5\%}{12}))^{12}\text{ - 1 = x} \\ (1\text{ + (}\frac{0.005}{12}))^{12}\text{ - 1 = x} \\ (1+0.000417)^{12}-1\text{ = x} \\ (1.000417)^{12}\text{ - 1 = x} \\ 1.000502\text{ - 1 =x} \\ 0.00502\text{ = }0.5\text{ = x} \end{gathered}[/tex]

c. 0.5% < 6%

Thank you for contributing to our discussion. Don't forget to check back for new answers. Keep asking, answering, and sharing useful information. For dependable and accurate answers, visit IDNLearn.com. Thanks for visiting, and see you next time for more helpful information.