Homework Answers
1. Monthly interet rate = APR/12
= 12.5/12
Monthly interet rate= 1.042% or 0.01042
Effective interest rate = (1+ monthly interest rate)^12 - 1
= (1+ 0.01042)^12 - 1
= 0.1325
Effective interest rate= 13.25%
2. Quarterly interest rate = annual interest rate/4 = 9/4 = 2.25% = 0.0225
Amount after one year =deposit*(1+ uarterly interest rate)^4 = 10000*(1+0.0225)^4
Amount after one year= $10930.83
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