You are considering a generous offer from two banks for your savings account. Bank A is offering an interest rate of 6% p.a. Bank B’s rate is 6% p.a. compounded semiannually. For a deposit amount of $1,000 today, determine: 1.Bank B’s effective semiannual and yearly rates. 2.Your account balance at the end of 5 years for both banks. 3.Which bank you would choose to do business with and why.draw cash flow diagram.

You are considering a generous offer from two banks for your savings account. Bank A is offering an interest rate of 6% p.a. Bank B’s rate is 6% p.a. compounded semiannually. For a deposit amount of $1,000 today, determine: 1.Bank B’s effective semiannual and yearly rates. 2.Your account balance at the end of 5 years for both banks. 3.Which bank you would choose to do business with and why.draw cash flow diagram.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter6: Saving And Investing

Section6.1: Why Save?

Problem 6R

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