Problemas
Amir is trying to decide between vo savings account plans at two lfferent banks. Bank A offers a luarterly compounded interest rate bf 0.95% , while Bank B offers 3.75% nterest compounded annually. Which is the better plan? Bank A Bank B Bank A Equation: __ Bank B Equation: __ US e t=1
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To determine which bank offers the better savings account plan, we need to compare the effective annual rates (EAR) of the two banks.Let's start with Bank A:Bank A offers a quarterly compounded interest rate of 0.95%. To calculate the effective annual rate, we can use the formula:EAR = (1 + r/n)^(n*t) - 1Where:- r is the nominal interest rate (0.95% or 0.0095 as a decimal)- n is the number of compounding periods per year (4 for quarterly)- t is the time in years (1 year)Plugging in the values, we get:EAR = (1 + 0.0095/4)^(4*1) - 1EAR = (1 + 0.002375)^(4) - 1EAR = 1.0095 - 1EAR = 0.0095 or 0.95%Now let's calculate the effective annual rate for Bank B:Bank B offers an annual compounded interest rate of 3.75%. Since the interest is compounded annually, the effective annual rate is the same as the nominal interest rate.EAR = 3.75%Comparing the effective annual rates, we can see that Bank B offers a higher effective annual rate of 3.75% compared to Bank A's 0.95%.Therefore, Bank B is the better plan.Bank A Equation: EAR = (1 + 0.0095/4)^(4*1) - 1Bank B Equation: EAR = 3.75%