Zoe has an investment account that earns 6% annual interest, compounded daily. Holly has an investment account that earns 6.32% annual interest, compounded bi-annually. Compute the annual percentage yields (APY) Zoe and Holly are receiving. Zoe: 3.29 % Holly: % Which one of the two has a better investment? Zoe Holly Hillary has an investment account with interest compounded quarterly. What annual interest rate does this account need to carry to earn the same annual percentage yield as Zoe's?
Zoe has an investment account that earns 6% annual interest, compounded daily. Holly has an investment account that earns 6.32% annual interest, compounded bi-annually. Compute the annual percentage yields (APY) Zoe and Holly are receiving. Zoe: 3.29 % Holly: % Which one of the two has a better investment? Zoe Holly Hillary has an investment account with interest compounded quarterly. What annual interest rate does this account need to carry to earn the same annual percentage yield as Zoe's?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Zoe has an investment account that earns 6% annual interest, compounded daily. Holly has an investment account that earns 6.32% annual interest, compounded bi-annually. Compute the annual percentage yields (APY) Zoe and Holly are receiving.
Zoe: 3.29 %
Holly: %
Which one of the two has a better investment?
- Zoe
- Holly
Hillary has an investment account with interest compounded quarterly. What annual interest rate does this account need to carry to earn the same annual percentage yield as Zoe's?
%
Expert Solution
Step 1
For Zoe:
Annual percentage yields (APY) =
Where,
r = annual interest = 6%
n = number of periods = 365 days
APY =
= 0.06183
or
6.18%
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