How long will it take $100 to double if it earns the following rates? Compounding occurs once a year. Round each answer to two decimal places. a. 389 year(s) b. 12% year(s) c. 214. year(s) d. 100%. year(5) ractice Problems 5-15: Semiannual and Cuher Compounding Feriods 5-16: Comporing interet Rates Effective versus nominal interest rates Bank A pays 6.5% interest compeunded annually on deposits, while Bonk B pays 6% compounded dally. 8. Aased on the EAR (or EFFW), which bank should yeu use? 1. You nould choose Bank A because its EAR is higher. II. You would choose Bank B becsuse its EAR is higher. III. You would choose Bank A because its nominal interest rate is highen IV. You would choose Eank B because its nomingl interest rate is higher. V. You are indifferent between the banks and your decision will be based upon which one offers you a gift for opening an account. b. Could your cheice of banks be influenced by the fact that you might want to withdraw your funds during the year as oppased to at the end of the year? Assume that your funds must be lef on depost during an entire compounding peried in order to receive any interest. 1. If funds must be left on depost until the end of the compounding period (1 year for bank A and 1 day for Bank B), and you think there is a high probability that you will make a. withdrawal during the veac, then Bank A might be preferable. 14. If funds must be let on deposit unta the end of the compounding peniod ( 1 year for Bank A and 1 day for Bank 0 ), and you have no intentions of making a witherawal during the year, then Bank 8 might be preferable. II. If funds must be loft on deposit undit the end of the compounding period ( 1 day for Bank A and 1 year for Bank B), and you think there is a high probability that you will make a wathdrawal during the year, then Bank B might be preferable. W. If funds must be left on deposk until the end of the compounding period ( 1 year for Blank A and 1 day for Bank B), and yeu think there is a high probability that you will inake a wandrawal during the vear, then Banik B might be preferable. W. If funds must be left on deposit unti the end of the compounding period ( 1 day for Bank A and 1 year for fank B), and you think there is a high probability that you will make a wathdrawal during the veas, then Bank A might be preferable