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?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 8EB: You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how...
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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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