Bob invests 1000 in a simple interest account thirty months, Ask an Expert

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Bob invests $1,000 in a simple interest account. Thirty months later, he finds the account has accumulated to $1.212.50.

a. Compute the annualized simple interest rate.

b. Compute the equivalent annualized rate compounded (1) annually, (2) semiannually, (3) quarterly, (4) monthly, and (5) continuously.

c. Which rate in part b is largest? Why?

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