SOLUTION: A passbook savings account has a rate of 5%. Find the effective annual yield if the interest is compounded quarterly. The effective annual yield is %

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Question 1175041: A passbook savings account has a rate of 5%. Find the effective annual yield if the interest is compounded quarterly.
The effective annual yield is %
Found 2 solutions by ewatrrr, ikleyn:
Answer by ewatrrr(24785) About Me  (Show Source):
You can put this solution on YOUR website!

Hi
r = .05
compounded quarterly

 effective Annual Rate = %281+%2B+.06%2F4%29%5E%284%29+-1 = .061364  0r 6.1364%
Wish You the Best in your Studies.


Answer by ikleyn(52781) About Me  (Show Source):
You can put this solution on YOUR website!
.

            The solution by  @ewatrrr is  INCORRECT.

            So I came to bring the correct solution. 


The effective annual yield is  


    %281%2B0.05%2F4%29%5E4 - 1 = 1.0125%5E4 - 1 = 1.050945 - 1 = 0.050945,  or, rounded, 0.051, which is 5.1%.    ANSWER

Solved.

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See the lessons
    - Compounded interest percentage problems
    - Problems on discretely compound accounts
in this site, and learn the subject from there.


After reading these lessons, you will tackle such problems on your own without asking for help from outside.

Also,  you have this free of charge online textbook in ALGEBRA-I in this site
    - ALGEBRA-I - YOUR ONLINE TEXTBOOK.

The referred lessons are the part of this online textbook under the topic "Logarithms".


Save the link to this online textbook together with its description

Free of charge online textbook in ALGEBRA-I
https://www.algebra.com/algebra/homework/quadratic/lessons/ALGEBRA-I-YOUR-ONLINE-TEXTBOOK.lesson

to your archive and use it when it is needed.


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