Problem 6-30 Simple Interest versus Compound Interest (LO3) Vanscoy Bank pays 7.1% simple interest on its investment accounts. If Vade Bank pays interest on its accounts compounded annually, what rate should the bank set if it wants to match Vanscoy Bank over an investment horizon of 9 years? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Interest rate %

Fundamentals of Financial Management (MindTap Course List)
15th Edition
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter5: Time Value Of Money
Section: Chapter Questions
Problem 27P: EFFECTIVE VERSUS NOMINAL INTEREST RATES Bank A pays 2% interest compounded annually on deposits,...
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Problem 6-30 Simple Interest versus Compound Interest (LO3)
Vanscoy Bank pays 7.1% simple interest on its investment accounts. If Vade Bank pays interest on its accounts compounded
annually, what rate should the bank set if it wants to match Vanscoy Bank over an investment horizon of 9 years? (Do not
round intermediate calculations. Round the final answer to 2 decimal places.)
Interest rate
%
Transcribed Image Text:Problem 6-30 Simple Interest versus Compound Interest (LO3) Vanscoy Bank pays 7.1% simple interest on its investment accounts. If Vade Bank pays interest on its accounts compounded annually, what rate should the bank set if it wants to match Vanscoy Bank over an investment horizon of 9 years? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Interest rate %
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