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Which do you​ prefer: a bank account that pays 5.1 % per year​ (EAR) for three...

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Finance

Which do you​ prefer: a bank account that pays 5.1 % per year​(EAR) for three years or

A. An account that pays 2.8 % every six monthsfor three​ years?

B. An account that pays 6.8 % every 18 monthsfor three​ years?

C. An account that pays 0.65 % per month forthree​ years? ​

(Note: Compare your current bank EAR with each of the threealternative accounts. Be careful not to round any intermediatesteps less than six decimal​ places.)

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If you deposit $ 1 into a bank account that pays 5.1 % per yearfor three​ years: The amount you will receive after three years is​[...]?

Answer & Explanation Solved by verified expert
4.1 Ratings (798 Votes)
We can calculate Effective Annual rate EAR with followingequation wherer Nominal    See Answer
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