Scott is saving for an overseas holiday and he is looking for the best bank in which to invest his money. Three banks are offering different interest rates as follows:
Bank Able: 8.1%(nominal p.a.) compounded monthly
Nank Beble: 8.2% (nominal p.a.) compounded twice yearly
Bank Ceble: 8.4% (effective p.a.) effective interest rate per year
a) compare effective rates to find which bak offers the best return on investments
b) Check your answer to a) by considering the amount of interest earned be each option over a 5 year time period.
c) Scott chooses to invest with bank ceble. Find their quarterly interest rate.
Cheers for the help!!
a) Effective Interest Rates:
Originally Posted by slanno
Bank Able - 8.41%
Bank Beble - 8.37%
Bank Ceble - 8.4%
Bank Able offers best returns on investment.
b) I don't know which value he invested so lets say $1000.
Bank Able - $84.10 P/A --> 5 years: $420.50
Bank Beble - $83.70 P/A --> 5 years: $418.50
Bank Ceble - $84.00 P/A --> 5 years: $420.00
c) 7.77% (Nominal P/A) Compounded Quarterly.
thanks so far!
how do i find the quarterly interest rate??