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prisoha [69]
2 years ago
10

To make CDs look more attractive as an investment than they really are, some banks advertise that their rates are higher than th

eir competitors’ rates; however, the fine print says that the rate is based on simple interest. If you were to deposit $24,000 at 11% per year simple interest in a CD, what compound interest rate would yield the same amount of money in 3 years? The compound interest rate that would yield the same amount of money in 3 years is % per year.
Business
1 answer:
grin007 [14]2 years ago
7 0

Answer:

compound interest rate is 9.97%

Explanation:

given data

deposit amount = $24,000

rate = 11% per year

time = 3 year

to find out

compound interest rate

solution

simple interest = P ( 1+rt)     ...............1

simple interest = 24000  ( 1+ 0.11 ×3 )

simple interest = $31920

so

compound interest rate is

amount = P ( (1+r)^t )      ................2

31920  = 24000  ( (1+r)^3 )

1.33 =  (1+r)^3

r = 0.09972 = 9.97 %

so compound interest rate is 9.97%

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