You agree to make 24 deposits of $500 at the beginning of each month into a bank account.At the end of the 24^th 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% E) 9.26%

Question

Quizplus · Accepted Answer

The future value of an annuity formula is used to calculate the nominal annual interest rate. By setting the future value to $13,000, the monthly deposit to $500, and solving for the interest rate, the nominal annual interest rate is approximately 7.62%.

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