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Bank #1 offers a 4.5% interest to all its depositors, and it has annual compounding. Bank #2 offers a 4.5% simple interest. Conceptual questions: If
Bank #1 offers a 4.5% interest to all its depositors, and it has annual compounding. Bank #2 offers a 4.5% simple interest.
Conceptual questions:
- If you deposit your money for a number of years, which of these two banks would you choose? Your answer: [ Select ] ["Bank #1", "Bank #2", "It doesn't matter"] .
- Now, why is that? Your answer: [ Select ] ["You would earn the same amount of interest over the years", "You would earn a lower amount of interest over the years", "You would earn a higher amount of interest over the years"] .
Now, let's calculate! Increase decimal places for any intermediate calculations, from the default 2 to 6 or higher. Only round your final answer to TWO decimal places: for example, $10,000.23.
- So, if you deposit $8,500 today, and leave it in the account for 25 years, how much will you have at the end of 25 years in Bank #1? Your answer: [ Select ] ["$9,214.42", "$17,591.16", "$19,352.82", "$24,787.05", "$25,546.19", "$28,600.44"] .
- If, instead, you choose Bank #2, how much will you have in 25 years? Your answer: [ Select ] ["$18,062.50", "$17,812.50", "$16,750.00", "$16,012.50", "$15,437.50", "$8,387.50"] .
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