5. You take $100 to your local savings bank to invest for five years. You are given the choice of two investments by the banker.

i. You can invest in a regular savings account that pays you 14.00% interest each year with interest compounded annually. That is each year the interest you earn gets deposited in your bank account and earns interest until the end of the five years.

ii. You can invest in a special account that pays you 20.00% interest each year, the catch is that the interest does not compound. Rather each year the interest payment is put into a special account which collects no further interest and cannot be reinvested anywhere until the end of the five years.

Which option should you select and why?

a, Select Option i: It earns $44.63 more than Option ii

b. Both Options earn you the same amount of money so you are indifferent between the two

c. Select Option ii: It earns $7.46 more than Option i

d. Select Option ii: It earns $30.00 more than Option i