Your friend, Pierre Maceau is facing a difficult decision. Having just inherited S75000 he is contemplating the following tow investment alternatives: his bank adviser in Paris recommended the opening of a saving account that would earn an annual interest rate of 4.15% compounded annually. If Pierre does not withdraw the money for two years, the interest rate would increase by 10 basis points to 4.25 percent for any year thereafter without withdrawal. Alternatively he could deposit his money in saving accounts the banks advertises as SIM account as "Simple and More;:. According to the banks terms, deposits .earns simple interests of 4.8% per year for a minimum of five years without withdrawals. Pierre has a stable income and is not planning on spending the money in near future. At the same time he is very risk averse which is the reason he is interested in opening a saving account as opposed to higher yielding but more risky investment alternatives. Based on your knowledge of the Time value of money concept he seeks your advice on the following questions. Assuming an investment period of five years would you recommend the SIM account? Does .your.answer, changes as the investment period double to ten years? Determine the number of years the money would have to remain invested in Pierre to be indifferent between the two account types. If Pierre can reinvest the simple interest from the SIM account in risk free bonds yielding 2.25 percent per year, which account type become more beneficial over ten year period