ENGR.ECONOMY CUSTOM FOR TAMU ISEN 667
ENGR.ECONOMY CUSTOM FOR TAMU ISEN 667
8th Edition
ISBN: 9781307584394
Author: Blank
Publisher: MCG/CREATE
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Chapter 1, Problem 40P
To determine

Calculate the compound interest rate.

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In order to make CDs look more attractive than they really are, some banks advertise that their rates are higher than their competitors', but the fine print says that the rate is a simple Interest rate. If a person deposits $7,500 at 3% per year simple interest, what compound Interest rate would yield the same amount of money in 3 years? The compound Interest rate that would yield the same amount of money in 3 years is 9.273 %.
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To make CDs look more attractive as an investment than they really are, some banks advertise that their rates are higher than their competitors' rates; however, the fine print says that the rate is based on simple interest. If you were to deposit $30,000 at 9% per year simple interest in a CD, what compound interest rate would yield the same amount of money in 3 years? The compound interest rate that would yield the same amount of money in 3 years is 1% per year.
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