n sso is invested at an interest rate of 3% per year. est compounded quarterly,
ID: 3115922 • Letter: N
Question
n sso is invested at an interest rate of 3% per year. est compounded quarterly, find the value of the investment after the given number of years (a) 1 year (b) 2 years (c) 5 years 32. Compound Interest If$2500 is invested at an interest rate of 2.5% per year, compounded daily, find the value of the investment after the given number of years. (a) 2 years (b) 3 years (c) 6 years 33. Compound Interest If $4000 is invested at an interest rate of 16% per year, compounded quarterly, find the value of the investment after the given number of years. (a) 4 years (b) 6 years ) 8 years 34. Compound Interest If $10,000 is invested at an interest rate of 10% per year. compounded semiannually, find the value of the investment after the given number of years. (a) 5 years (b) 10 years (c) 15 years 35. Compound Interest If $3000 is invested at an interest rate of 4% each year, find the amount of the investment at the end of 5 years for the following compounding methods (a) Annual (b) Semiannual(e) Monthly (d) Daily 36. Compound Interest If $4000 is invested in an account for which interest is compounded quarterly, find the amount of the investment at the end of 5 years for the following interest rates. (a) 6% (b) 61% (c) 7% (d) 8% 37. Annual Percentage Yield Find the annual percentage yield for an investment that earns 2.5% each year, compounded daily. 38. Annual Percentage Yield Find the annual percentage yield for an investment that earns 4% each year, compounded monthly. Annual Percentage Yield Find the annual percentage yield for an investment that earns 3.25% each year, compounded quarterly. 39. 40. Annual Percentage Yield Find the annual percentage yield for an investment that earns 5.75% each year, compounded semiannually. 41. Compound Interest -Kai wants to invest $5000, and he is comparing two different investment options: (i) 3 interest each year, compounded semiannually (ii) 3% interest each year, compounded daily Which of the two options would provide the better investment?Explanation / Answer
38)
The annual percentage yield is 4% for an investment;
This is compounded monthly so we are to find the annual percentage yield;
Monthly interest yield = 4/12 = 0.333%
So after 12 periods of compounding it will become (1.00333)12 = 1.04074
This means that the annual percentage yield is 4.074 or 4.07%
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