Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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=
A bank features a savings account that has an annual percentage rate of r
interest compounded quarterly. Tatiana deposits $9,000 into the account.
The account balance can be modeled by the exponential formula A(t) = a (1 +
7-)kt,
where A is account value after t years, a is the principal (starting amount), r is the annual
percentage rate, k is the number of times each year that the interest is compounded.
(A) What values should be used for a, r, and k?
a =
r =
5.6% with
k =
(B) How much money will Tatiana have in the account in 7 years?
Answer = $
7.
Round answer to the nearest penny.
APY =
=
%.
Round answer to 3 decimal places.
(C) What is the annual percentage yield (APY) for the savings account? (The APY is the actual or
effective annual percentage rate which includes all compounding in the year).
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Transcribed Image Text:= A bank features a savings account that has an annual percentage rate of r interest compounded quarterly. Tatiana deposits $9,000 into the account. The account balance can be modeled by the exponential formula A(t) = a (1 + 7-)kt, where A is account value after t years, a is the principal (starting amount), r is the annual percentage rate, k is the number of times each year that the interest is compounded. (A) What values should be used for a, r, and k? a = r = 5.6% with k = (B) How much money will Tatiana have in the account in 7 years? Answer = $ 7. Round answer to the nearest penny. APY = = %. Round answer to 3 decimal places. (C) What is the annual percentage yield (APY) for the savings account? (The APY is the actual or effective annual percentage rate which includes all compounding in the year).
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