3. You invest $400 into a bank account at the beginning of each year for 20 years. The account pays out interest at the end of every year at an annual effective interest rate of i %. The interest is reinvested at an annual effective rate of 0.4i %. Find i so that the yield rate on the entire investment over the 20 year period is 10% effective (similar to #16 of 7.4).
3. You invest $400 into a bank account at the beginning of each year for 20 years. The account pays out interest at the end of every year at an annual effective interest rate of i %. The interest is reinvested at an annual effective rate of 0.4i %. Find i so that the yield rate on the entire investment over the 20 year period is 10% effective (similar to #16 of 7.4).
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:3. You invest $400 into a bank account at the beginning of each year for 20 years. The account pays out
interest at the end of every year at an annual effective interest rate of i %. The interest is reinvested at an
annual effective rate of 0.4i %. Find i so that the yield rate on the entire investment over the 20 year period is
10% effective (similar to #16 of 7.4).
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