A bank pays a quoted annual (nominal) interest rate of 8. However, it pays interest (compounded) daily using a 365-day year. What is the effective annual rate of return?
A) 7.86
B) 7.54
C) 8.57
D) 8.33
E) 9.21
Question 2
1,200 is received at the beginning of year 1, 2,200 is received at the beginning of year 2, and 3,300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, their combined future value at the end of year 3 is:
A) 6,700
B) 17,000
C) 12,510
D) 7,504
E) 8,141
The Rate Law
Maximal Heart Rate Over Time
Bank teller assisting with customer service.
How to calculate simple interest (Part 1)
How to calculate simple interest (Part 2)
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