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if you deposit $5,000 today into an account earning an annual rate of 9%, in the

ID: 2613882 • Letter: I

Question

if you deposit $5,000 today into an account earning an annual rate of 9%, in the third year how much interest would be earned? how much of the total is simple interest?

If Burns National Bank pays 6.8 oercent compunded annually, the EAR for the deposit is what percent?

Payday loans issued by banks are often referred to as "direct deposit advances." In early 2013, the average direct deposit advance charged $10 for a $100 advance and was due in 10 days. What percentage is the EAR on this type of loan?

Explanation / Answer

1)

Interest earned in 3rd year:

= $5,000*(1+9%)*(1+9%)*9%

= $534.65

Interest earned in 3rd year - simple interest:

= $5,000*9%

= $450