SOLUTION: Determine the effective annual yield for each investment. Then select the better investment. Assume 360 days in a year. 8.5% compounded​ monthly; 8.75% compounded annually

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Question 1176315: Determine the effective annual yield for each investment. Then select the better investment. Assume 360 days in a year.
8.5% compounded​ monthly; 8.75% compounded annually
The effective annual yield for a 8.5% compounded monthly investment is __%.
​(Round to two decimal places as​ needed.)
Answer by ewatrrr(24785)   (Show Source): You can put this solution on YOUR website!

Hi
 In General 
A = Accumulated Amount
P= principal = 
r= annual rate = .
n= periods per year = 
t= years =

A = P(1 + .085/12)^12      vs  A= P(1.085)^1 
          A=1.088390906P   vs  A= 1.0875P
8.5% compounded monthly is the better investment

Wish You the Best in your Studies.


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