Gce Model Questions Vol1 2024 Commerce Question 40

Practice objective / multiple choice question 40 from the 2024 Gce Model Questions Vol1 Commerce examination.

Gce Model Questions Vol1 2024 Commerce Objective / Multiple Choice Medium Difficulty
Question 40 GCE_MODEL_QUESTIONS_VOL1 • 2024 • COMMERCE • objective

A customer deposits \(\text{₦}200,000\) in a bank account that offers a nominal interest rate of \(6\%\) per annum compounded quarterly. After 2 years the bank changes the nominal rate to \(7\%\) per annum compounded monthly for the next 3 years.\n\n(i) Calculate the total amount in the account at the end of the 5‑year period.\n\n(ii) Determine the effective annual rate (EAR) that applies over the whole 5‑year period.

Answer Options

Correct Answer A. Total amount ≈ ₦277,800; effective annual rate ≈ 6.8\%
B. Total amount ≈ ₦270,200; effective annual rate ≈ 6.2%
C. Total amount ≈ ₦275,000; effective annual rate ≈ 6.5%
D. Total amount ≈ ₦280,500; effective annual rate ≈ 7.0%
Correct Answer
A
Correct Option:
Total amount ≈ ₦277,800; effective annual rate ≈ 6.8\%

About This Question

This is Gce Model Questions Vol1 2024 Commerce Question 40. It is one of the objective questions from the 2024 Gce Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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