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Group Activity 11 |
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Group Activity 11 |
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All group activities must include a statement signed by all members of your group that each group member fully participated in the activity.
1. Suppose that you deposit $500 in a bank that offers an annual percentage rate of 6.0% compounded annually.
a. What is your account balance after one year?
b. What is your
account balance after 10 years?
2. How long will it take your money to triple at an annual percentage rate of 8% compounded annually?
3. Suppose that you deposit $750 in a bank that offers an annual percentage rate of 4.0% compounded monthly.
a. What is your account balance after one year?
b. What is your account balance
after 8 years?
c. What is the
annual percentage yield for this account? (Recall that the
annual percentage yield is the percentage change in the account
for one year, in this case in 12 months.)
4. What is the annual percentage yield of an account that earning 5.2% interest compounded quarterly?
5. Suppose you had a choice between two investments. One compounds interest annually at an annual percentage rate of 4.50%. The other compounds interest monthly at an annual percentage rate 4.45%. Which is the higher yielding investment? Briefly explain why.
