What is the annual interest rate for an account that compounds monthly at a rate of 2.5%?

a.

2.10%

b.

2.50%

c.

2.53%

d.

2.55%

e.

2.58%

Step-by-step explanation:

The rate is given by the following formula

Where

is the rate

is the interest in decimals

is the number of compounded periods

Replacing each value, we have

Then, we express the rate in percentage:

Therefore, the right answer is D. 2.55%.

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