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Richard wants to save $100,000 in 12 years. He is offered the following options by his bank: 1. An account with interest rate 4.5% and
Richard wants to save $100,000 in 12 years. He is offered the following options by his bank:
1. An account with interest rate 4.5% and annual compounding
2. An account with interest rate 4.0% and semi-annual compounding
3. An account with interest rate 3.7% and quarterly compounding
Determine how much he must save today to reach his goal in 12 years. Which of the options above would you recommend? Explain your answer.
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