Question: A student has received an inheritance and has $8000 to invest. Interest rates are currently 3.5% pa and they wish to invest for 3 years.

A student has received an inheritance and has $8000 to invest. Interest rates are currently 3.5% pa and they wish to invest for 3 years.

a) Bank A compounds interest annually. What will the student's investment be worth at the end of the period?

b) Bank B compounds interest monthly. What will the student's investment be worth at the end of the period?

c) Which investment option – Bank A or Bank B - would you recommend and why?

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