Answer:
Therefore, the effective annual yield for $1 invested for 1 year at 2.4% compounded monthly is 1.0243 - 1 = 0.0243 = 2.43% [tex]\neq[/tex] 2.6% and so the bank statement is incorrect.
Step-by-step explanation:
Data:
[tex]A_{0}[/tex] = 1
r = 2.4% = 0.024
n = 12
t = 1
General equation of amount that is compounded monthly:
[tex]A(t)[/tex] = [tex]A_{0}[/tex] [tex]([/tex][tex]1[/tex] + [tex]\frac{r}{n}[/tex][tex])^{nt}[/tex]
Substitute values:
[tex]A(1)[/tex] = [tex]1(1 +[/tex] [tex]\frac{0.024}{12}[/tex][tex])^{12(1)}[/tex]
Evaluate:
[tex]A(1)=1.0243[/tex]
