Question
Asked Oct 20, 2019
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You would like to have $72,000 available in 15 years. There are two options. Account A has a rate of 8.58.5​% compounded once a year. Account B has a rate of 88​% compounded daily. How much would you have to deposit in each account to reach your​ goal? Assume 360 days in a year. 

  You must invest ​$ in Account A.

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Expert Answer

Step 1

Let A and B be the amount to be deposited in Account A and Account B respectively to get the desired maturity value of $ 72,000.

n = number of year = 15

m = frequency of compounding in a year

For Account A, m = 1

For account B, m = 360

Step 2

If P is the amount deposited in an account with annual interest rate r compounded m times a year, for n year, then future value FV is given by,

FV = P x (1 + r / m)n x m

For Account A, this equation will result ...

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