A student puts $10,000 in a savings account that pays 16% annual interest, compounded semi-annually and...
A student puts $10,000 in a savings account that pays 16% annual interest, compounded semi-annually and quarterly. Round to the nearest cents.
a) How much money will the student have at the end of 5 years? Ending Value: $
b) How much interest will the student have earned in 5 years? Interest Earned: $
c)What is the effective yield (APY)? APY: %, (written as percent, round to the two decimal place as needed)
Homework Answers
| Particulars | a. Semi-annual | b. Qtrly |
| Deposit | 10,000 | 10,000 |
| × FVF | 2.15892 | 2.19112 |
| Future value (answer) | 21,589.25 | 21,911.23 |
c
APY
Semi-annual = (1+16%/2)^2 -1 = 16.64%
Quarterly = (1+16%/4)^4-1 = 16.99%
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