SOLUTION: For each of the following accounts, give the growth factor per compounding period, then give the annual growth factor and the annual percent change (APY). Account A has a 5% APR

Algebra ->  Finance -> SOLUTION: For each of the following accounts, give the growth factor per compounding period, then give the annual growth factor and the annual percent change (APY). Account A has a 5% APR      Log On


   

Question 1149281: For each of the following accounts, give the growth factor per compounding period, then give the annual growth factor and the annual percent change (APY).
Account A has a 5% APR compounded monthly.
Monthly growth factor:

Annual growth factor:

APY:
%
Account B has a 3.2% APR compounded daily. Assume there are 365 days in the year.
Daily growth factor:

Annual growth factor:

APY:
%

Answer by greenestamps(13200) About Me  (Show Source):
You can put this solution on YOUR website!


Account A: 5% APR, compounded monthly (12 times per year)

(1) monthly interest rate: 5% (i.e., 0.05) divided by 12
(2) monthly growth factor: 1 plus the monthly interest rate
(3) annual growth factor: monthly growth factor, to the 12th power
(4) APY: annual growth factor, minus 1

Account B: same process; different numbers.

You can do the calculations....