A) Approximately how many years would it take for an investment to grow sixfold if it were invested at 13 percent compounded monthly? Assume that you invest $1today.

Part 1

If you invest $1 at 13 percent compounded monthly, about how many years would it take for your investment to grow sixfold to $6? (Hint: Remember to convert your calculator solution to years.)

B) Your grandmother asks for your help in choosing a certificate of deposit (CD) from a bank with a one-year maturity and a fixed interest rate. The first certificate of deposit, CD #1, pays 1.95 percent APR compounded quarterly, while the second certificate of deposit, CD #2, pays 2.00 percent APR compounded semiannually. What is the effective annual rate (the EAR) of each CD, and which CD do you recommend to your grandmother?

Part 1

If the first certificate of deposit, CD #1, pays 1.95 percent APR compounded quarterly, the EAR for the deposit is

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