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following savings accounts, A and B . For both accounts, interest is calculated and paid daily ( i . e . k = 3 6
following savings accounts, A and B For both accounts, interest is calculated and paid daily ie Account A: Interest is AER. If you withdraw before days you pay a penalty sum equivalent to the first days of interest. If you withdraw on the st day, or later, there is no penalty. Account B: Interest is APR. Whenever you withdraw the money, you pay a penalty sum equivalent to the first days of interest. Assume that the first of interest is tax free, and any interest earned over this is taxed at a Explain the difference between AER annual equivalent rate and APR annual percentage rate and express the APR as a function of the AER. b If you put into account show that you would have less than if you took it all out after exactly days. c If you put into account calculate how much money you would have if you took it all out after exactly days. Now assume you decide to keep an amount of your money, in bank account so that you also keep amount in bank account B d Write down, your Gross pretax income you have after exactly days, as a function of e Write down, your Net posttax income after exactly days, as a function of fSketchN Now suppose there is a third savings account available, Cinterest is also calculated and paid daily: Account C: Interest is APR. You can take money out of this account whenever you like without any penalty. g Suppose you leave the money in one of the three accounts for days. Carefully explain in detail why is the best account iff din
following savings accounts, A and B For both accounts, interest is calculated and paid daily ie
Account A: Interest is AER. If you withdraw before days you pay a penalty sum
equivalent to the first days of interest. If you withdraw on the st day, or later, there is
no penalty.
Account B: Interest is APR. Whenever you withdraw the money, you pay a penalty sum
equivalent to the first days of interest.
Assume that the first of interest is tax free, and any interest earned over this is taxed at
a Explain the difference between AER annual equivalent rate and APR annual
percentage rate and express the APR as a function of the AER.
b If you put into account show that you would have less than if you
took it all out after exactly days.
c If you put into account calculate how much money you would have if you
took it all out after exactly days.
Now assume you decide to keep an amount of your money, in bank account so that you
also keep amount in bank account B
d Write down, your Gross pretax income you have after exactly days, as a
function of
e Write down, your Net posttax income after exactly days, as a function of
fSketchN
Now suppose there is a third savings account available, Cinterest is also calculated and paid
daily:
Account C: Interest is APR. You can take money out of this account whenever you like
without any penalty.
g Suppose you leave the money in one of the three accounts for days. Carefully
explain in detail why is the best account iff din
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