Suppose you have recently invested $3,000 in a 3-year Certificate of Deposit (CD) at Indiana Members Credit Union that has an Annual Percentage rate (APR) -- a quoted rate of 3.75%. 

a) If the Effective Annual Rate (EAR) is the same as the Annual Percentage Rate (APR), how much will your investment be worth in 3 years? (3 points) 

b) Suppose the interest is compounded quarterly. What is the future value (after 3 years) of your investment? (3 points) What is the Effective Annual Rate (EAR)? (3 points) 

c) Suppose the interest is compounded monthly. What is the future value (after 3 years) of your investment? (3 points) What is the Effective Annual Rate (EAR)? 

Answer rating: 100% (QA)

a If the Effective Annual Rate EAR is the same as the Annual Percentage Rate APR you can use the sim... View the full answer