An employee decided to invest in a trust fund which gives an interest rate of 2% compounded quarterly. Employee’s monthly salary is ₱70,000 and decided to invest 10% of her salary per month in the fund for 4 years. On the 5th year, the employee got promoted and her salary was increased to ₱100,000. She continued to invest the same percentage of her salary to the fund for 7 more years until she retires.QUESTION:What will be the interest rate per interest period if convert to compounding monthly? 1.9967% 0.0166442% 2.0151% 0.166389%

Effective annual rate (EAR) refers to the rate of interest which is an outcomes of compounding…

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SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter19: Family Tax Planning

Section: Chapter Questions

Problem 27P

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An employee decided to invest in a trust fund which gives an interest rate of 2% compounded quarterly. Employee’s monthly salary is ₱70,000 and decided to invest 10% of her salary per month in the fund for 4 years. On the 5^th year, the employee got promoted and her salary was increased to ₱100,000. She continued to invest the same percentage of her salary to the fund for 7 more years until she retires.

QUESTION:

What will be the interest rate per interest period if convert to compounding monthly?

		1.9967%
		0.0166442%
		2.0151%
		0.166389%

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