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Vladimir79 [104]
3 years ago
7

Christina Stratton invested $8,000 in a certificate of deposit for 4 years. The certificate earns interest at an annual rate of

6.00 percent compounded quarterly. The amount per $1.00 is 1.061831. What is the effective annual yield ? Show work.
Mathematics
1 answer:
galben [10]3 years ago
6 0

Answer:

6.13%

Step-by-step explanation:

We are given an investment of $8000 deposited for 4 years. We have to find the effective annual yield for which we will need the interest rate and the compounding period.

Annual interest rate compunded quarterly, r = 6% = 0.06

Compounding period is quarterly, n = 4

Annual EffectiveYield =  (1+\frac{r}{n})^{n}-1\\=(1+\frac{0.06 }{4})^{4}-1

= 0.0613

The annual effective yield is 6.13%

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