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10-31-2007, 02:03 PM
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#1 |
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Greenhorn
Join Date: Jul 2006
Posts: 24
Rep Power: 6  |
If I deposit $5K in savings acct that paid 8% interest compounded qrterly. What is effective rate of interest?
If I deposit $5K in savings acct that paid 8% interest compounded qrterly. What is effective rate of interest?
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10-31-2007, 02:03 PM
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#2 |
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Greenhorn
Join Date: Jul 2006
Posts: 22
Rep Power: 6 |
If I deposit $5K in savings acct that paid 8% interest compounded qrterly. What is effective rate of interest?
Where are you going to get 8% in a saving account?? (For real where?)
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10-31-2007, 02:03 PM
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#3 |
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Greenhorn
Join Date: Jul 2006
Posts: 46
Rep Power: 6 |
If I deposit $5K in savings acct that paid 8% interest compounded qrterly. What is effective rate of interest?
the effective rate is if when the interest is higher than inflation. if u read kiyosaki book about cash flow quadrant, u will understand why some rich people dont like saving in bank.
because the interest is lower than the inflation. this means ur money will be reduced too |
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10-31-2007, 02:03 PM
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#4 |
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Greenhorn
Join Date: Jul 2006
Posts: 11
Rep Power: 0 |
If I deposit $5K in savings acct that paid 8% interest compounded qrterly. What is effective rate of interest?
I=PRT
I= interest P= princial $5000 R= rate 8% T= time 1/4 year(Quarterly compounded) 5000x.08x1/4=100 5100x.08x1/4=102 5202x.08x1/4=104.04 5306.04x.08x1/4=106.12 5412.16/5000=1.082432 8.24% effective rate If inflation is 4% then your money is actually growing at only 4.24% per year. |
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