You receive a cash flow of 20,000$ and you plan to deposit it for a year in a saving account that offers an annual interest rate of 16% with quarterly compounding. The teller asks you if you would consider a different account with annual compounding.

For which interest rate would you be indifferent to switch to annual compounding?

Answer rating: 100% (QA)

To find the interest rate at which you would be indifferent to switching from quarterly compounding ... View the full answer