An insurance agent has been attempting to convince you to purchase an savings plan towards your retirement but you are not convinced of its value. After all, you are young, and have many years to prepare for this. He proposes that you save $325 at the beginning of every month for 30 years, in an account that pays 12% annual interest, compounded monthly. Required: b) Compute the Effective Annual Return (EAR) on this account. Please answer this question showing all
An insurance agent has been attempting to convince you to purchase an savings plan towards your retirement but you are not convinced of its value. After all, you are young, and have many years to prepare for this. He proposes that you save $325 at the beginning of every month for 30 years, in an account that pays 12% annual interest, compounded monthly. Required: b) Compute the Effective Annual Return (EAR) on this account. Please answer this question showing all
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 28P
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- An insurance agent has been attempting to convince you to purchase an savings plan towards your retirement but you are not convinced of its value. After all, you are young, and have many years to prepare for this. He proposes that you save $325 at the beginning of every month for 30 years, in an account that pays 12% annual interest, compounded monthly.
Required:
b) Compute the Effective Annual Return (EAR) on this account.
Please answer this question showing all working.
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