A bank agrees to pay an eair interest of 5.25 % annually. Thebank across the str

Question

A bank agrees to pay an eair interest of 5.25 % annually. Thebank across the street agrees to pay 5.15% annually compoundedquarterly. I deposit 10,000 in each bank. When I go back a yearlater how much $ do I have in each account Bank 1 10,300 -----Bank 2 10,400 Bank 1 10,525 ------ Bank 2 10,525 Bank 1 10,600-----Bank 2 10,525 Bank 1 11,000 ----Bank 2 11,000 Would it be the second answer? That's the answer Igot, but I'm not sure about it. A bank agrees to pay an eair interest of 5.25 % annually. Thebank across the street agrees to pay 5.15% annually compoundedquarterly. I deposit 10,000 in each bank. When I go back a yearlater how much $ do I have in each account Bank 1 10,300 -----Bank 2 10,400 Bank 1 10,525 ------ Bank 2 10,525 Bank 1 10,600-----Bank 2 10,525 Bank 1 11,000 ----Bank 2 11,000 Would it be the second answer? That's the answer Igot, but I'm not sure about it. A bank agrees to pay an eair interest of 5.25 % annually. Thebank across the street agrees to pay 5.15% annually compoundedquarterly. I deposit 10,000 in each bank. When I go back a yearlater how much $ do I have in each account Bank 1 10,300 -----Bank 2 10,400 Bank 1 10,525 ------ Bank 2 10,525 Bank 1 10,600-----Bank 2 10,525 Bank 1 11,000 ----Bank 2 11,000

Explanation / Answer

For Bank 1 I 5.25% N 1.00 PV 10,000.00 ( A ) FVF(1,5.25% ) 1.05 ( B ) FV 10,525.00 ( A )* ( B ) For Bank 2 I 5.15% / 12 0.43% PV 10,000.00 ( C ) N 12.00 FVF ( 12, 0.43% ) 1.05 ( D ) FV 10,525.03 ( C )*( D ) Hence , you are absolutelycorrect!! For Bank 1 I 5.25% N 1.00 PV 10,000.00 ( A ) FVF(1,5.25% ) 1.05 ( B ) FV 10,525.00 ( A )* ( B ) For Bank 2 I 5.15% / 12 0.43% PV 10,000.00 ( C ) N 12.00 FVF ( 12, 0.43% ) 1.05 ( D ) FV 10,525.03 ( C )*( D )

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