Mike is planning to take a Caribbean vacation in two years. In order to save money for the trip, he invests his $1200 tax refund. a. Bank 1 offers simple interest of 8 %. At the end of the two years of investment, how much will Mike have in his savings account if he chooses Bank 1? b. Bank 2 offers 3.5% compounded quarterly. At the end of the two years of investment, how much will Mike have in his savings account if he chooses Bank 2? c. If the trip costs $1,350. Is Mike going to be able to accomplish his goal? Which bank should he choose? Explain why.
Mike is planning to take a Caribbean vacation in two years. In order to save money for the trip, he invests his $1200 tax refund. a. Bank 1 offers simple interest of 8 %. At the end of the two years of investment, how much will Mike have in his savings account if he chooses Bank 1? b. Bank 2 offers 3.5% compounded quarterly. At the end of the two years of investment, how much will Mike have in his savings account if he chooses Bank 2? c. If the trip costs $1,350. Is Mike going to be able to accomplish his goal? Which bank should he choose? Explain why.
Chapter3: Income Sources
Section: Chapter Questions
Problem 58P
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Mike is planning to take a Caribbean vacation in two years. In order to save money for the trip, he invests his $1200 tax refund.
a. Bank 1 offers simple interest of 8 %. At the end of the two years of investment, how much will Mike have in his savings account if he chooses Bank 1?
b. Bank 2 offers 3.5% compounded quarterly. At the end of the two years of investment, how much will Mike have in his savings account if he chooses Bank 2?
c. If the trip costs $1,350. Is Mike going to be able to accomplish his goal? Which bank should he choose? Explain why.
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