Derek can deposit $294.00 per month for the next 10 years into an account at Bank...

Derek can deposit $294.00 per month for the next 10 years into an account at Bank A. The first deposit will be made next month. Bank A pays 12.00% and compounds interest monthly. Derek can deposit $2,445.00 per year for the next 10 years into an account at Bank B. The first deposit will be made next year. Bank B compounds interest annually. What rate must Bank B pay for Derek to have the same amount in both accounts after 10 years?

Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434))

Expert Solution

We see that the rate to be provided is given as=RATE(10,-2445,PV(12%/12,12*10,-249))
=6.7716%

jeff jeffy answered 2 years ago

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