WHAT IS THE EFFECTIVE ANNUAL RATE ON A DEPOSIT OF $3,000 MADE EIGHT...

4. What is the effective annual rate on a deposit of $3,000 made eight years ago if the deposit is worth $4,453.52 today? The deposit pays interest semi-annually. A) 2.50% B) 5.00% C) 5.06% D) 10.12% E) 12.50% Solution C Using your calculator: PV= -3,000 FV= 4,453.52 N=16 PMT =0 COMP I/Y I/Y = 2.50% this is the semi-annual rate EAR = (1+ .025)^2 -1 = 5.06%