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starrhunter

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?

  • 11 months ago
  • 11 months ago

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

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

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

    • 11 months ago
  4. satellite73
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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

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

    • 11 months ago
  6. satellite73
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    oh yeah my fault, sorry

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

    • 11 months ago
  8. starrhunter
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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?

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

    • 11 months ago
  10. satellite73
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    lets compute one

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

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

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

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

    • 11 months ago
  15. satellite73
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    right

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

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

    • 11 months ago
  18. starrhunter
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    is the little 4 on the outside an exponent?

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

    • 11 months ago
  20. starrhunter
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    1.039 is what it gave me

    • 11 months ago
  21. satellite73
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    me too

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

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

    • 11 months ago
  24. starrhunter
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    thanks for the help

    • 11 months ago
  25. satellite73
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    you good with this?

    • 11 months ago
  26. satellite73
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    yw

    • 11 months ago
  27. starrhunter
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    yes indeed :3

    • 11 months ago
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