(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%.