Question

DI ou invest $1,000 in a bank which compounds interest quarterly. You leave the money in the bank for 5 years. w grows to $1,380.42 What was the nominal rate of interest? Show your work: $ 1,000.00 13801:41 nominal rate interes PVA = CF/r x (1 - Fortalas TVM Type here to search

Answer 1

LAnswer Compound_ 'Inlevest I Financial institution mys interest by compound interest Method Compound Interest means_iabevest on interest. That meens.whet_ interest_accrues the financial instition will give Ligleveston outstanding amount plus interest amount compound Linteves [ pays_more interest than simple interest method A Clti) Aok Acénuel compound Interest) = Where À i e n z principal Amount invested. role of interest - 7/100 no. of fears. In the question, it is given that interest compouoled quauters -A : $ 1006 zonda linall. I - n = Amoyht_Accoule = 5 years x 4 1380, 42 quarters = 20 quaulers - Amount Accuye scompound Int): A Clti). 1380.42. loco citizens 1.38042 : (1 + i) 20 quaulius (1.38042) + 20 949rtex 5 11016250 - 1 t í LT = 11016250 al 0.016250 77100 0.016250 = 1.6250 % I guentruly

It is given that interest is compounded quoleely . Rate of Interest (r) = Rate of for whole year interest x Puguherty) Quarters - 1.6250 % x 4 . Role of interest for = 6.50% Yes علوطن Bank pays 6.50% interest on deposits compounding quartertly. Nominal Rabe of Interest : 15.50% p.q.]