- IME Problems solving Each Question 30 points Total 120 points: Eyla in detail
ID: 2600143 • Letter: #
Question
- IME Problems solving Each Question 30 points Total 120 points: Eyla in detail and show of your work for each Problem with set up, Formula: Calculation... and Recommendation. Bax Your Answer Use Provided Space. 2. Luis SDSU Engineer student; his Uncle Left him SSS0,000. He has been decided to put it into savings account fol the next year or, so He finds there are varying interests at saving institutions: 2)275% Compounded Annually, b) 2.250% Compounded Quarterly, e) 2.125% Compounded Continuously Anda) 2 % Compounded Daily. e) which Method do you recommend to him? Explain in detail your setup, Formula, Calculation, and recommendation.Explanation / Answer
Value of investment = P* (1+(r/n))^(n * t)
a) 2.375% compunded annually
Value of investment = 550000* (1+(0.02375/1))^(1 * 1)
= $5,63,062.5
b) 2.250% compounded quarterly
Value of investment = 550000* (1+(0.02250/4))^(4 * 1)
= $5,62,479.81
c) 2.125% compounded continuosly
Continuous compunding formula = P*er*t
= 550000e0.02125*1
= $,561,812.56
d) 2 1/4% compounded daily
interest rate = 2.25%
Value of investment = 550000* (1+(0.0225/365))^(365 * 1)
= $5,62,514.87
We should go for 2.375% compounded annually as it has the highest value after 1 year.
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