USING EXCEL: Garrett has $10,000 that he can deposit in any of three savings acc
ID: 2684890 • Letter: U
Question
USING EXCEL: Garrett has $10,000 that he can deposit in any of three savings accounts for a 3-year period. Bank A compounds interest on an annual basis, bank B compounds interest twice each year, and bank C compounds interest each quarter. All three banks have a stated annual interest reate of 4%. a.) What amount would Garrett have at the end of the 3rd year, leaving all interest paid on deposit, in each bank? b.) What effective annual reate (or annual percentage yield) would he earn in each of the banks?Explanation / Answer
amount would Garrett have at the end of the 3rd year, leaving all interest paid on deposit, in each bank bank A = 10000(1+.04)^3 = 11248.64 bank B = 10000(1+.02)^6 = 11261.62 bank C = 10000(1+.01)^12 = 11268.25 What effective annual rate (or annual percentage yield) would he earn in each of the banks bank A = 4% bank B = 10000(1+r)^3 = 11261.62 r= 4.03 % bank C = 10000(1+r)^3 = 11268.25 r = 4.06 %
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.