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Assume that the amount of money deposited in a bank is proportional to the square of the interest rate the bank pays on this money. Furthermore, the bank can reinvest this money at 12%. Find the interest rate the bank should pay to maximize profit. (Use the simple interest formula.)

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amirmeeka

Answer:

8% interest.

Explanation:

P = 0.12m - im

m = kr²

P = 0.12kr² - rkr²

kr² = 0.08kr

r = 0.08

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