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Naomi deposited money into a savings account that is compounded quarterly at an interest rate of 6%. She thinks this quarterly rate is the same as a monthly interest rate of 1.25%. Is Naomi right? If so, explain why and show how you got your answer. Is Naomi incorrect? If so, explain the mistake in her reasoning, give the correct monthly interest rate, and show how you got your answer. Please help me!! It’s due today

Respuesta :

Correct answer is Naomi calculation is incorrect and correct monthly interest rate is 2%.


Solution:


We are given that quarterly interest rate =6%

That means interest rate per quarter is 6%.

Since quarter means 3 months, interest rate per 3 months =6%

Hence interest rate per one month=6/3=2%

That means monthly interest rate is 2% which means Naomi calculation is incorrect.

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