Peter has RM10,000 that he can deposit in any three savings accounts for a 3-year period. Bank A compounds interest on an annual basis, Bank B compounds interest twice each year, and Bank C compounds interest each quarter. All three banks have a stated annual interest rate of 4%. What amount would Peter have at the end of the third year, leaving all interest paid on deposit, in each bank? On the basis of your findings, which bank should Peter choose? Why?
Peter has RM10,000 that he can deposit in any three savings accounts for a 3-year period. Bank A compounds interest on an annual basis, Bank B compounds interest twice each year, and Bank C compounds interest each quarter. All three banks have a stated annual interest rate of 4%. What amount would Peter have at the end of the third year, leaving all interest paid on deposit, in each bank? On the basis of your findings, which bank should Peter choose? Why?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Peter has RM10,000 that he can deposit in any three savings accounts for a
3-year period. Bank A
compounds interest twice each year, and Bank C compounds interest each
quarter. All three banks have a stated annual interest rate of 4%. What
amount would Peter have at the end of the third year, leaving all interest paid
on deposit, in each bank? On the basis of your findings, which bank should
Peter choose? Why?
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