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Rashida won a $40 000 lottery and is considering investing her winnings. Her two options are shown below: Option #1: Deposit $30 000 into
Rashida won a $40 000 lottery and is considering investing her winnings. Her two options are shown below: Option #1: Deposit $30 000 into a high-interest savings account at 2.5% compounded annually for 8 years and invest the other $10 000 into a Guaranteed Investment Certificate which earns 5% interest compounded quarterly for a term of 8 years. Option #2: Purchase a 4 year $40 000 Canada Savings Bond (CSB) with a rate of 3.6% interest compounded monthly and then reinvest the money into her Tax Free Savings Account (TFSA) which earns 1.2% interest compounded semi-annually for the remaining 4 years.
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