Ila had $10000 to invest for 4 years. She has been offered two options, which bank will get her the most money?
Bank A: 7% pa compound annually
Bank B: 6.65% pa compound monthly
Bank A: 7% pa compound annually
Bank B: 6.65% pa compound monthly
-
A = P(1 + r/n)^nt
P principal
r rate
n number of times compounded per year
t number of years
A = 10000(1 + 0.07/1)^1*4
A = 13,107.96 <-- Bank A
A = 10000(1 + 0.0665/12)^12*4
A = 13,037.77
P principal
r rate
n number of times compounded per year
t number of years
A = 10000(1 + 0.07/1)^1*4
A = 13,107.96 <-- Bank A
A = 10000(1 + 0.0665/12)^12*4
A = 13,037.77
-
B