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Ann was given a gift of $10,000 by her grandparents. She has a choice between 2 accounts to invest her money. One account earns 2.35% annual interest compounded monthly. The other account earns 3.6% annual interest compounded quarterly. If she plans on leaving the money in the account for 15 years which account would be the better investment? Explain your choice by using sound mathematical reasoning.

Ann was given a gift of $10,000 by her grandparents. She has a choice between 2 accounts to invest her money. One account earns 2.35% annual interest compounded monthly. The other account earns 3.6% annual interest compounded quarterly. If she plans on leaving the money in the account for 15 years which account would be the better investment? Explain your choice by using sound mathematical reasoning.

EBK CFIN
EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 25PROB
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5. $5000 is invested in an account that earns 5% annual interest compounded quarterly. What is the balance after 12 years? (Standard 2) I PV PMT FV P/Y C/Y 6. Ann was given a gift of $10,000 by her grandparents. She has a choice between 2 accounts to invest her money. One account earns 2.35% annual interest compounded monthly. The other account earns 3.6% annual interest compounded quarterly. If she plans on leaving the money in the account for 15 years which account would be the better investment? Explain your choice by using sound mathematical reasoning. (Standard 2 and 3) I I PV PV PMT PMT FV FV P/Y P/Y C/Y C/Y
Transcribed Image Text:5. $5000 is invested in an account that earns 5% annual interest compounded quarterly. What is the balance after 12 years? (Standard 2) I PV PMT FV P/Y C/Y 6. Ann was given a gift of $10,000 by her grandparents. She has a choice between 2 accounts to invest her money. One account earns 2.35% annual interest compounded monthly. The other account earns 3.6% annual interest compounded quarterly. If she plans on leaving the money in the account for 15 years which account would be the better investment? Explain your choice by using sound mathematical reasoning. (Standard 2 and 3) I I PV PV PMT PMT FV FV P/Y P/Y C/Y C/Y
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