8 Assessing investment options. Peter Principal has a lump sum of £10,000 available for investment now and wishes to accumulate at least the sum of £15,000 in five years time, although he considers that he can invest the money for longer if worthwhile. He is faced with the following investment options, all requiring a minimum investment of £10,000:

(i) The Bank of Ambition offers a five-year deposit account paying a fixed-rate of interest of 8 per cent with annual compounding. For periods less than five years the bank currently pays 5 per cent interest.

(ii) The Happy Saver Institution offers a six year deposit account paying a fixedrate of interest of 7 per cent with annual compounding plus a terminal bonus of £500 if the money is left on deposit for the entire investment term.

Advise Peter which, if either, of the above options, would be a suitable investment for him, stating clearly any assumptions you make. Ignore taxation.