First National Bank pays 6.8% interest compounded semiannually. Second National

Question

First National Bank pays 6.8% 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

Explanation / Answer

First National Bank pays 6.8% interest compounded semiannually. Second National

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