Solutions to Chapter 4 Problems

The total interest paid by First Simple Bank is the interest rate per period times the number of periods. In other words, the interest by First Simple Bank paid over 10 years will be:.07(10) = .7. First Complex Bank pays compound interest, so the interest paid by this bank will be the FV factor of $1, or: (1 + r)10. Setting the two equal, we get: ................
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