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    Problems regarding interest rates

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    a. If you put $1200 in the bank now, how much will you have after six years? What if you earn 12% compounded interest per year?

    b. If you buy a painting for $300 and are able to sell it after 4 years for $500, what was your effective annual interest rate on your investment?

    c. What is the effective interest rate of an advertised interest rate of 14% nominal rate compounded monthly?

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    Solution Preview

    Basic economics
    a. If you put $1200 in the bank now, how much will you have after six years
    if you earn 12% compounded interest per year?

    Compound interest formula: Future value = Present value * ...

    Solution Summary

    This solution provides calculations for various problems regarding interest rates.

    $2.19