Which do you prefer: a bank account that pays 5.0% per year (EAR) for three years or a. An account that pays 2.5% every six months for three years? b. An account that pays 7.5% every 18 months for three years? c. An account that pays 0.50% per month for three years? (Note: Compare your current bank EAR with each of the three alternative accounts. Be careful not to round any intermediate steps less than six decimal places.) If you deposit $1 into a bank account that pays 5.0% per year for three years: The amount you will receive after three years is _________________ (Round to five decimal places.)

Which do you prefer: a bank account that pays 5.0% per year (EAR) for three years or a. An account that pays 2.5% every six months for three years? b. An account that pays 7.5% every 18 months for three years? c. An account that pays 0.50% per month for three years? (Note: Compare your current bank EAR with each of the three alternative accounts. Be careful not to round any intermediate steps less than six decimal places.) If you deposit $1 into a bank account that pays 5.0% per year for three years: The amount you will receive after three years is _________________ (Round to five decimal places.)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 8EB: You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how...

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Question

Which do you prefer: a bank account that pays

5.0%

per year (EAR) for three years or

a. An account that pays

2.5%

every six months for three years?

b. An account that pays

7.5%

every 18 months for three years?

c. An account that pays

0.50%

per month for three years?

(Note: Compare your current bank EAR with each of the three alternative accounts. Be careful not to round any intermediate steps less than six decimal places.)

If you deposit

into a bank account that pays

5.0%

per year for three years:

The amount you will receive after three years is _________________
(Round to five decimal places.)

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