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Kitty [74]
3 years ago
7

Assume that the amount of money deposited in a bank is proportional to the square of the interest rate the bank pays on this mon

ey. Furthermore, the bank can reinvest this money at 12%. Find the interest rate the bank should pay to maximize profit. (Use the simple interest formula.)
Business
1 answer:
vredina [299]3 years ago
7 0

Answer:

8% interest.

Explanation:

<em>P</em> = 0.12<em>m</em> - <em>im</em>

<em>m = kr²</em>

<em>P = 0.12kr² - rkr²</em>

<em>kr² = </em>0.08<em>kr</em>

<em>r = </em>0.08

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