Question

please answer question below

Answer 1

The General Bank offers 1% interest per month on a savings account. The monthly interest is added to the balance. The People's Bank provides 13% interest per year and is therefore paid up annually.
a). Calculate the Volksbank growth factor per year in three decimals.

Answer 2

Please put your entire problem statement AND all your best work in the VERY FIRST post. So much more convenient for everyone.

Answer 3

volksbank = peoples bank

Answer 4

Isn't the Volksbank annual rate given in the problem statement?

Answer 5

no it's not

Answer 6

Okay, what is that 13%?

Answer 7

the 13% is the interest per year

Answer 8

How does that relate to growth factor per year?

Answer 9

i do not know?

Answer 10

Well, that makes no sense. Why have you been given this problem?

Answer 11

it was my exam question which i failed so I wanted to see how they got to the answer. the answer for this question is given, and is 1,13

Answer 12

Annual Interest Rate = Annual Growth Percentage
1 + Annual Interest = Growth Rate

Annual Interest Rate = 0,13
Annual Growth Rate = 1 + Annual Interest Rate = 1,13

For the other one...

\((1 + 0.01)^{12} = 1,12682503\) = Annual Growth Rate
0,12682503 = Annual Interest Rate

Answer 13

ahh ok thank you it makes sence now!

Answer 14

b) How big is your capital at Volksbank after 1.5 years if you start capital € 1000

Answer 15

That's not clear to me unless we are told how they handle partial years. Is there a penalty? Can we do it monthly? \((1 + 0,13)^{1/12} = 1,010236844\)

1.5 yrs = 18 mos

Answer 16

Clarification on General Bank.

1% / month ==> 12% Annual Nominal Interest Rate
1% / month ==> 12.682503% Annual Effective Interest Rate

Not every banking system cares about the Nominal Rate.

Answer 17

well the answer that the teacher came up with was $1130

Answer 18

What do you get? \(1000\cdot 1,010236844^{18} = \)?? That's if we can do it monthly.

If we can NOT do it monthly, we probably have to separate the capital from the noncapitalized interest. The last capitalization date was the end of the 1st year.

1000 * (1 + 0,13) = 1130
In this account, there is also some noncapitalized interest that has accrued.

Answer 19

ok i think i get it

Answer 20

thanks for the help