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problem: Suppose you have a choice between 2 deposit accounts. Account X has an annual percentage rate of 12.25% but with interest compounded monthly. Account Y has a year percentage rate of 12.20% with interest compounded continuously. Determine which account provides the highest effective annual return?

[A] Ralph’s Ratchets Corporation purchased ratchets rotator one year ago for $6,500. During the year it generated $4,000 in cash flow. If Ralph sells it, he could receive $6,100 for it. Determine ratchets rotator’s rate of return?

[B] Asset A was purchased six months ago for $25,000 and has generated $1,500 cash flow during that period. Determine the asset’s rate of return if it can be sold for $26,750 today?

Risk Management, Finance

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