You deposit $175,000 in a savings account. The APR (Annual Percentage Rate) is 6%. Calculate the following: B) Assuming that the interest is compounded every month, what is the amount accumulated after ten years? For this one I am not sure what equation to use, I have gotten two separate answers: EAR- (1+.06/12)^12-1= 6.168% ---- 175000*(1.06168)^10= $318,400.99 EAR- (1+.06/12)^12*10-1= 81.94% or 1.8194 --- 175,000(1.8194)= 318,395 Which one is right? C) Assuming that the interest is compounded every day, what is the amount accumulated after ten years? EAR- (1+.06/365)^365-1= 6.183% ----- 175000*(1.06183)^10= $318,851.13 Am I doing this correctly or should I use: EAR- (1+.06/365)^365*10-1= ?

You deposit $175,000 in a savings account. The APR (Annual Percentage Rate) is 6%. Calculate the following: B) Assuming that the interest is compounded every month, what is the amount accumulated after ten years? For this one I am not sure what equation to use, I have gotten two separate answers: EAR- (1+.06/12)^12-1= 6.168% ---- 175000(1.06168)^10= $318,400.99 EAR- (1+.06/12)^1210-1= 81.94% or 1.8194 --- 175,000(1.8194)= 318,395 Which one is right? C) Assuming that the interest is compounded every day, what is the amount accumulated after ten years? EAR- (1+.06/365)^365-1= 6.183% ----- 175000(1.06183)^10= $318,851.13 Am I doing this correctly or should I use: EAR- (1+.06/365)^36510-1= ?

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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