Time Value of Money for Savings Accounts
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Sarah Jones has $10,000 that she can deposit in any of three savings accounts for a 3-year period. Bank A compounds interest on an annual basis, bank B compounds interest twice each year, and bank C compounds interest each quarter. All three banks have a started annual interest rate of 4%.
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The time value of money for savings accounting are examined.
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Time Value of Money
Sarah Jones has $10,000 that she can deposit in any of three savings accounts for a 3-year period. Bank A compounds interest on an annual basis, bank B compounds interest twice each year, and bank C compounds interest each quarter. All three banks have a started annual interest rate of 4%.
1. What amount would Miss Jones have at the end of the third year, leaving all interest paid on deposit, in each bank?
Use the compound interest formula to calculate the amount at the end of three years
The compound interest formula is
FV = PV (1+rate)^n
Bank ...
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