Section PF.9 – Solutions to the Practice Problems

1.

a. $9,769.44
b. 2.836%

2.

a. $3,155.95
b. 5.198%

3. 3.660%

4. 5.884%

5. 4.783%

6. 2.320%

7. 5.9%

8.

a. 6.183%
b. 6.168%
c. 6%

9.

a. 16.180%
b. 16.075%
c. 15%

10.
Bank A APY = 4.959…%
Bank B APY = 4.9167…%
Bank A is the better option even though Bank B compounds daily.

11.
Bank A APY = 7.1859…%
Bank B APY = 7.19649…%
Bank B is the better option even though Bank A offered a higher interest rate.

12.
Bank A APY = 2.03%
Bank B APY = 2.0202…%
Bank A is the better option even though Bank A only compounds annually.