Question

George is comparing three investment accounts offering different rates.


Account A: APR of 3.75% compounding monthly

Account B: APR of 3.85% compounding quarterly

Account C: APR of 3.95% compounding daily


Which account will give George at least a 4% annual yield? (4 points)


Account A


Account B


Account C


Account B and Account C

Answer 1

Answer:

Account C will give George at least a 4% annual yield.

Step-by-step explanation:

This problem can be solved by using simple maths formula given below

Year rate = (1+i)^n-1

where i = compounding rate and n = interval period

Now checking annual rate for each option using above formula

Account A)

Yr = 3.8% ( n= 12 and i= 3.75/12)

Account B)

Yr = 3.9 % ( n= 4 and i= 3.85/4)

Account C)

Yr = 4 % ( n= 365 and i= 3.95/365)