We use cookies to personalise content and advertisements and to analyse access to our website. Furthermore, our partners for online advertising receive pseudonymised information about your use of our website. cookie policy and privacy policy.
 
+0  
 
0
342
1
avatar

Dr. Fu Manchu has a bank account that has an annual interest rate of 6 percent, but it compounds monthly. If this is equivalent to a bank account that compounds annually at a rate of $r$ percent, then what is $r$? (Give your answer to the nearest hundredth.)

 Aug 6, 2018
 #1
avatar
+1

6% compounded monthly =[1 + 0.06/12]^12 =1.005^12=1.061678 - 1 x 100 =6.1678% Effective annual rate, which is equivalent to the rate of "r" compounded annually. In other words, 6% compounded monthly = 6.17%, or bank's rate of "r" compounded annually.

 Aug 6, 2018
edited by Guest  Aug 6, 2018

10 Online Users

avatar
avatar
avatar