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Homework answers / question archive / You have a savings account in which you leave the funds for one year without adding to or withdrawing from the account
You have a savings account in which you leave the funds for one year without adding to or withdrawing from the account. Which would you rather? have: a daily compounded rate of 0.035?%, a weekly compounded rate of 0.285?%, a monthly compounded rate of 1.45?%, a quarterly compounded rater of 3.50?%, a semiannually compounded rate of 8?%, or an annually compounded rate of 18?%?
I need the answer to What is the EAR of a weekly compounded rate of 0.285?%?
a monthly compounded rate of 1.45?%
a quarterly compounded rater of 3.50?%
a semiannually compounded rate of 8?%,
an annually compounded rate of 18?%?
A daily compounded rate of 0.035?%;
EAR = (1 + Periodic Rate)C/Y- 1
= (1.00035)365- 1
= 1.1362 -1
= 0.1362 or 13.62%
EAR of a weekly compounded rate of 0.285?%;
EAR = (1 + Periodic Rate)C/Y- 1
= (1+ 0.285%)52- 1
= 1.1595 -1
= 0.1595 or 15.95%
A monthly compounded rate of 1.45?%;
EAR = (1 + Periodic Rate)C/Y- 1
= (1+ 1.45%)12- 1
= 1.18857 - 1
= 0.18857 or 18.86%
A quarterly compounded rater of 3.50?%;
EAR = (1 + Periodic Rate)C/Y- 1
= (1+ 3.50%)4- 1
= 1.1475 -1
= 0.1475 or 14.75%
A semiannually compounded rate of 8?%;
EAR = (1 + Periodic Rate)C/Y- 1
= (1+ 8%)2- 1
= 1.1664 -1
= 0.1664 or 16.64%%
An annually compounded rate of 18?%;
EAR = (1 + Periodic Rate)C/Y- 1
= (1+ 18%)1- 1
= 1.18 -1
= 0.18 or 18%
