You have $1000 to invest, and you have two options:Option A: 1.725% compounded semiannuallyOption B: 1.675% compounded continuously.(a) Calculate the annual percentage yield for each option. (Round your answers to three decimal places.)Option AOption B%Which is the better option?O Option AOption B(b) Calculate the future value of each investment after 2 years and after 5 years. (Round your answers to two decimal places.)Option AOption BYears1034.941034.06XX21089.671087.35XXDoes your choice of option depend on the number of years you leave the money invested?Yes

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Asked Sep 20, 2019
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You have $1000 to invest, and you have two options:
Option A: 1.725% compounded semiannually
Option B: 1.675% compounded continuously.
(a) Calculate the annual percentage yield for each option. (Round your answers to three decimal places.)
Option A
Option B
%
Which is the better option?
O Option A
Option B
(b) Calculate the future value of each investment after 2 years and after 5 years. (Round your answers to two decimal places.)
Option A
Option B
Years
1034.94
1034.06
X
X
2
1089.67
1087.35
X
X
Does your choice of option depend on the number of years you leave the money invested?
Yes
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You have $1000 to invest, and you have two options: Option A: 1.725% compounded semiannually Option B: 1.675% compounded continuously. (a) Calculate the annual percentage yield for each option. (Round your answers to three decimal places.) Option A Option B % Which is the better option? O Option A Option B (b) Calculate the future value of each investment after 2 years and after 5 years. (Round your answers to two decimal places.) Option A Option B Years 1034.94 1034.06 X X 2 1089.67 1087.35 X X Does your choice of option depend on the number of years you leave the money invested? Yes

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Expert Answer

Step 1

Calculate the annual percentage yield as follows:

Option A:

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APY 1+1 1.725% -1 2 (1.008625)1 -1.017324390625-1 0.017324390625 or 1.732%

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Step 2

Option B:

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APY e 1 =e675%-1 1.675 =1.0168910677778-1 0.0168910677778 or 1.689%

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Step 3

Option A is b...

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