- IME Problems solving Each Question 30 points Total 120 points: Eyla in detail
ID: 1129981 • 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
Initial investment = $550000
Annual Compounding: FV = $550,000 x (1 + (2.375% / 1)) ^ (1 x 1) = $563,062.5
Quarterly Compounding: FV = $550,000 x (1 + (2.250% / 4)) ^ (4 x 1) = $562,479.81
Daily Compounding: FV = $550,000 x (1 + (2.25% / 365)) ^ (365 x 1) = $562514.88
Continuous Compounding: FV = $550,000 x 2.7183 ^ (2.125% x 1) = $561812.64
As the maximum value is obtained from 2.375% annual compounding thus it should be selected.
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