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First National Bank pays 5.9% interest compounded semiannually. Second National Bank pays 6% interest, compounded monthly....

First National Bank pays 5.9% interest compounded semiannually. Second National Bank pays 6% interest, compounded monthly.


a.

Calculate the future value for each dollar invested in First National (Assume you invest $1). (Do not round intermediate calculations. Round your answer to 5 decimal places.)


  Future value $   


b.

Calculate the future value for each dollar invested in Second National (Assume you invest $1). (Do not round intermediate calculations. Round your answer to 5 decimal places.)


  Future value $   


c. Which bank offers the higher effective annual rate?

  • Second National Bank

  • First National Bank
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Answer #1

The effective rate of interest of second national bank is more when compared to first national bank

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