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starrhunter

  • one year ago

Please help? 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?

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  1. satellite73
    • one year ago
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    you need to compute three numbers \[(1+\frac{.0375}{4})^4\] \[(1+\frac{.0385}{12})^{12}\] \[(1+\frac{.0395}{365})^{365}\]

  2. starrhunter
    • one year ago
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    so which ever equals at least "4" will give me the answer then?

  3. satellite73
    • one year ago
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    each will look like \(1+.0somthing\) choose the one or ones with the something greater than or equal to 4

  4. satellite73
    • one year ago
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    none will give you 4 if the answer looks like \(1.04...\) then that is a yield of larger than \(4\%\) if the answer is \(1.03...\) then no

  5. starrhunter
    • one year ago
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    wait the first two equations are mixed up am i right?

  6. satellite73
    • one year ago
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    oh yeah my fault, sorry

  7. satellite73
    • one year ago
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    \[(1+\frac{.0375}{12})^{12}\]

  8. starrhunter
    • one year ago
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    it's quite alright. I know how to set up the problem now. but about the yeild, the number won't equal 4, but if the last digit in the number is greater than or equal to 4 than that is the answer i would choose?

  9. satellite73
    • one year ago
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    \[(1+\frac{.0385}{4})^{4}\] good catch

  10. satellite73
    • one year ago
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    lets compute one

  11. satellite73
    • one year ago
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    here is the first one http://www.wolframalpha.com/input/?i=%281%2B.0375%2F12%29^12

  12. satellite73
    • one year ago
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    you can see that the answer is \[1.033815...\]

  13. starrhunter
    • one year ago
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    so that one can be ruled out

  14. satellite73
    • one year ago
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    so this one is out since it is smaller than \(1.04\)

  15. satellite73
    • one year ago
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    right

  16. starrhunter
    • one year ago
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    I'll try the second one..

  17. satellite73
    • one year ago
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    ok you can edit the one i did to compute it if you like

  18. starrhunter
    • one year ago
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    is the little 4 on the outside an exponent?

  19. satellite73
    • one year ago
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    yes, that needs to be a 4, and also the denominator under \(.0385\) should be a 4 also

  20. starrhunter
    • one year ago
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    1.039 is what it gave me

  21. satellite73
    • one year ago
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    me too

  22. starrhunter
    • one year ago
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    it is the last one, it gave me 1.04

  23. satellite73
    • one year ago
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    then i guess that is the one you want

  24. starrhunter
    • one year ago
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    thanks for the help

  25. satellite73
    • one year ago
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    you good with this?

  26. satellite73
    • one year ago
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    yw

  27. starrhunter
    • one year ago
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    yes indeed :3

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