Question

I need help with two Financial Algebra questions. I always give a medal to the best answer. Please, PLEASE help me out! (:

Answer 1

First question:

Ashley is comparing three investment accounts offering different rates.

Option A: APR of 4.95% compounding monthly
Option B: APR of 4.85% compounding quarterly
Option C: APR of 4.895% compounding daily

She would like to earn at least a 5% annual yield. Which account(s) will give Alexandra the yield she wants?

Options A and B only

Option B only

Options A and C only

Option C only

Answer 2

Second question:

Part 1: Explain which companies would advertise APR over APY and describe how this would help them attract customers. (4 points)

Part 2: Create a unique APR (state how often the rate is compounded) and calculate the corresponding APY. Use a comparison of the two rates to verify your answer to part 1

(I only need help with Part 2!)

Answer 3

well the relationship between apr and apy is:

(1+apr/n)^n = (1+apy)

Answer 4

Okay, so I could say that the APR is 2.35 and the APY is 4.47?

Answer 5

2.35% and 4.47% is what I meant

Answer 6

no, they give you the APR, they give you the number of times it occurs in a year; so calculating the relevant APY is just a matter of plugging into the formula.

Answer 7

Oh, you're talking about question 1!

Answer 8

for Option A: APR of 4.95% compounding monthly

(1 + .0495/12)^12 = 1+ APY

yes, and they want that to be 5 or better

Answer 9

Okay, give me a second and I'll show you what I got

Answer 10

2.0506386171982448?

Answer 11

subtract 1, not add 1 :)

.050638... is a little over 5%

Answer 12

Oh, my bad lol
So, option A would be the answer?

Answer 13

A is valid, that narrows it down to 2 choices, see if B is good or bad

Answer 14

okay hold on (:

Answer 15

Option B was too low.
This is what I got for Option C: 0.0501643943493422
So, the answer would be Option A and C, correct? (:

Answer 16

very good :)

Answer 17

Sweet!

Answer 18

Thanks for the medal!

Answer 19

you did good work :) now you should be able to do that part 2 just fine.

Answer 20

Thanks! So, for part two, I can just pick any percentage for the APR and APY I want to create my "unique" APR?

Answer 21

pick your favorite APR, like 10%

choose your favorite compounding rate: 1,000,000 lol

and use them to define a corresponding APY value

Answer 22

lol Okay! May I ask if you could stay? I just want to make sure I am doing this correctly. I really want to get a 100% on this quiz (:

Answer 23

stay for more questions? or stay to see if you did part 2 correctly?

Answer 24

Stay to see if I did part 2 correctly

Answer 25

i might have time for that; make sure you let me know the APR and compounding rate you pcik so i can verify it

Answer 26

Okay will do. (: It shouldn't take me too long.

Answer 27

APR: 16.24%
Compounding rate: 12
(1+0.1624/12)^12 = 1.1750502449692981 - 1 = 0.1750502449692981

Answer 28

yep, looks good. i would round it to 0.1751, or 17.51% for the APY

Answer 29

Okay. Thank you very much! You were extremely helpful!

Answer 30

youre welcome, and good luck