Neco Model Questions Vol1 2020 Commerce Question 17

Practice objective / multiple choice question 17 from the 2020 Neco Model Questions Vol1 Commerce examination.

Neco Model Questions Vol1 2020 Commerce Objective / Multiple Choice Medium Difficulty
Question 17 NECO_MODEL_QUESTIONS_VOL1 • 2020 • COMMERCE • objective

A customer deposits \(\text{₦}200{,}000\) in a bank that offers a nominal annual interest rate of 6% compounded quarterly. After 2 years the bank changes the nominal rate to 5% compounded monthly for the next 3 years. Calculate the amount in the account at the end of the 5‑year period and determine the average annual effective interest rate over the whole period.

Answer Options

A. Final amount ≈ ₦263,900; average annual effective rate ≈ 5.7%
B. Final amount ≈ ₦267,200; average annual effective rate ≈ 5.9%
Correct Answer C. Final amount ≈ ₦261,678; average annual effective rate ≈ 5.5%
D. Final amount ≈ ₦259,400; average annual effective rate ≈ 5.3%
Correct Answer
C
Correct Option:
Final amount ≈ ₦261,678; average annual effective rate ≈ 5.5%

About This Question

This is Neco Model Questions Vol1 2020 Commerce Question 17. It is one of the objective questions from the 2020 Neco Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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