MATHEMATICS MIDDLE SCHOOL

If the APR of a savings account is 4.8% and interest is compounded monthly,what is the approximate APY of the account?

O A. 1.05%

O B. 10.49%

O C. 4.91%

O D. 4%

Answers

Answer 1
Answer:

Answer:

  C.  4.91%

Step-by-step explanation:

The effect of frequent compounding is to increase the nominal interest rate by a small factor. For interest rates in a practical range (<20%/year), the effective increase in rate will be approximately half the original interest rate.

Approximation

For an interest rate of 4.8%, we expect the compounding to increase it by less than 2.4%. The maximum effective rate due to compounding is approximately (4.8%)(1 +2.4%) ≈ 4.91%.

Exact computation

For nominal annual rate r compounded n times per year, the effective annual rate is ...

  r' = (1 +r/n)^n -1

For r = 0.048 and n = 12, this becomes ...

  r' = (1 +0.048/12)^12 -1 = 1.004^12 -1 ≈ 1.049070208 -1 ≈ 4.91%

__

Additional comment

After you have worked with interest compounding for a bit, you realize compounding increases the effective rate by a small amount. That means the value will be more than 4.8% (eliminating choices A and D), but certainly will not be as high as 10% (eliminating choice B). The only reasonable choice is C, which happens to be the correct one.

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Answers

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It will take him 5 hours and 15 minutes to rake the leaves for 6 neighbors. Hope I could help! :D

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Answers

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Answer:

Step-by-step explanation:

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Answers


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Answers

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Answers

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Answers

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Sale price: $26.13 
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so...
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This is because 30% is 10% multiplied by 3. So you just have to multiply 3.90 by 3.
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so...
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This follows the same principle as before.
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Hope this helped :)
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