(Q. 5 IN B) A DEPOSIT OF $3,500 MADE THREE YEARS AGO IS WORTH $5,20...
9. (Q. 5 in B) A deposit of $3,500 made three years ago is worth $5,200 today.
The deposit pays interest quarterly. What is the APR with quarterly compounding
on this deposit?
A) 12.97%
B) 13.42%
C) 14.15%
D) 15.54%
Answer B
N=12, PMT=0, FV=$5,200, PV=-$3,500, CPTÆI/Y=3.3541 (this is the quarterly rate),
APR = 3.3541% × 4 = 13.4164%.