You agree to make 24 deposits of $500 at the BEGINNING of each month into a bank account. At the end of the 24th month, you will have $13,000 in your account. If the bank compounds interest monthly, what nominal annual interest rate will you be earning?
A) 7.62%
B) 8.00%
C) 8.40%
D) 8.82%

Question

Quizplus · Accepted Answer

The future value of an annuity due formula is used here, where deposits are made at the beginning of each period. Solving for the nominal annual interest rate that results in a future value of $13,000 with 24 monthly deposits of $500, the correct rate is approximately 7.62%.

You Agree to Make 24 Deposits of $500 at the BEGINNING