Question 1 Delia Martin has $10,000 that she can bewilder in whatsoever of terzetto nest egg accounts for a 3- grade period. camber A compounds following on an categorybook bottom, slang B compounds disport twice each year and cant C compounds interest each quarter. All three marges s brace a utter annual interest say of 4 percent. a)What total would Ms Martin have at the oddity of the third year leaving all interest gainful on restore in each bank? Bank A (principal+ interest)10,000 x 1.04^ 3=$11248.64 Bank B(principal+ interest)10,000 x 1.02%^6=$11261.62 Bank C(principal+ interest)10,000 x 1.01^12=$11268.25 So, Bank A interests: 11,248.64-10,000=$1,248.64 Bank B interests: 11,261.62-10,000=$1,261.62 Bank C interests: 11,268.25-10,000=$1,268.25 b) What effective annual identify (EAR) would she earn in each of the banks? Bank AFor bank A compounds interest on an stated annual rear, thus, its annual interest rate is 4%. Bank B1+4%/22-1=4.04% Bank C1+4%/44-1= 4.06% c) On the basis of your findings in A and B, which bank should Ms Martin deal with? wherefore? I suggest Ms Martin to choose bank C. Because of bank C has higher annual interest ratetherefore, she can deposit in bank C to obtain higher interest. d) If a fourth part bank -Bank D, also with a 4percent stated interest rate - compounds interest continuously, how much would Ms Martin have at the mop up of the third year?
Does this alternating(a) change your recommendation in c? Explain wherefore or why not? If deposit in bank D, Ms Martin could gains interest incontrovertible principal as at a lower place 10000 x 2.7183x0.04 =$11274.83 This result ! would be affecting the steer in question C. Because compound interest leave fall continuously based on the generated interest in a certain term plus principal, and thus, Ms Martin could receiving much interest if she deposits in bank D. Q2- You have been asked for your advice... If you want to liquidate a full essay, order it on our website: OrderCustomPaper.com
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