 Which rate is better if you’re a saver?  7.30% compounded quarterly  7.275% compounded monthly  7.25% compounded weekly  Find equivalent annually.

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 Which rate is better if you’re a saver?  7.30% compounded quarterly  7.275% compounded monthly  7.25% compounded weekly  Find equivalent annually compounded rate of interest and then compare

 Second function of Number 2 on Calculator: ICONV  3 Variables:  NOM = stated annual rate (nominal rate)  C/Y = compounding periods per year  EFF = effective annually compounded rate of interest (EAR)

 Say your credit card balance remains at $2,000 every month. (You make payments but new purchases and interest charges keep it at exactly $2,000 each month.)  Interest rate = 22.9% compounded monthly  How is monthly interest calculated? Annual interest?  Why is true cost to borrower greater than 22.9%?

 Borrow $100,000 for 15 years. Repay in equal monthly payments (part principal, part interest).  Compare interest rate of 8% compounded annually to 8% compounded monthly.  Under which rate do you pay more interest?

 Savers love frequent compounding of interest  Borrowers don’t like it, but they don’t have any choice!

 Deposit $400 monthly at the end of each month into a 401K. Deposits earn an average of 5%, compounded monthly.  How much is in the account after 45 years?  How much of that did you contribute yourself?

 Suppose you switch the account balance to a safer investment after 45 years (upon retirement) that pays only 3% interest, compounded monthly.  What equal amount could you withdraw, each month, from your account over a 20 year period to have a zero balance in the account after the last withdrawal?