How Much Should a Monthly Compounded Account with an EAR

question 10

Multiple Choice

How much should a monthly compounded account with an EAR of 18% earn semi-annually?

• A)2.80%
• B)3.00%
• C)2.77%
• D)8.63%

---

Definitions:

State Unemployment Taxes

Taxes paid by employers to fund the state unemployment compensation programs for laid-off workers.

Merit Rating

A system used to evaluate and grade an employee’s performance, often influencing salary increments and promotions.

Unemployment Tax Rates

Rates set by governments to fund unemployment insurance programs, calculated as a percentage of employer payroll expenses.

Accrued Vacation Benefits

The earned but not yet taken or paid vacation time that is owed to employees, recognized as a liability on the balance sheet.