Question

Select the correct answer.

What is the annual interest rate for an account that compounds monthly at a rate of 2.5%?

A.
2.10%
B.
2.50%
C.
2.53%
D.
2.55%
E.
2.58%

Answer 1

The annual interest rate for an account that compounds monthly at a rate of 2.5% is 3.05%.

Step-by-step explanation:

The annual interest rate for an account that compounds monthly at a rate of 2.5% can be calculated using the formula:

Annual interest rate = (1 + Monthly interest rate)^12 - 1

Plugging in the given rate of 2.5% into the formula:

Annual interest rate = (1 + 0.025)^12 - 1 = 0.03047 = 3.05%

Therefore, the correct answer is 3.05%.

Answer 2

C is the correct answer