Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi, tutor, i'm not really sure how to do th is problem Bank A offers an interest rate of 5.5% per annum compounded annually on

Hi, tutor,

i'm not really sure how to do th is problem

Bank A offers an interest rate of 5.5% per annum compounded annually on deposits of more than $10,000. An investor wants to deposit $25,000.

(i) What would her balance be after 3 years? (my answer: 67448.3)

(ii) How long will she need to wait until the balance is twice the initial deposit? (my answer:6.58 years)

Before making her deposit of $25,000, the investor explored offers from other banks and found two other investment strategies. Bank B offers continuously compounded interest at the rate of 5.3% per annum, and bank C offers an interest rate of 5.4% per annum compounded quarterly.

(i) If the investor chooses Bank B, how much would her balance be after 3 years? (my answer: 29308.45)

(ii) If the investor chooses Bank C, how much would her balance be after 3 years? (my answer:76017.06)

thank you so much :)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations Of Finance

Authors: Arthur J. Keown, John H. Martin, J. William Petty

10th Edition

0135160618, 978-0135160619

More Books

Students also viewed these Finance questions