You have $10,000 to invest for 5 years. Your local bank has the following accoun

Question

You have $10,000 to invest for 5 years. Your local bank has the following accounts available: Account 1 for $500 or over: 5.5 percent per year simple interest Account 2 for $2,000 or over: 5 percent per year compound interest Account 3 for $6,000 or over: 6.5 percent per year simple interest Account 4 for $10,000 or over 6 percent per year compound interest Construct a table showing the projected amount of money in each account at the end of each of the 5 years. Which do you prefer? (2.3 and 2.4)

Explanation / Answer

Account 1

Projected amount = 10000*5*5.5%+ 10000 =$12750

Account 2

Projected amount = 10000*(1+5%)^5 =$12762.82

Account 3

Projected amount = 10000*5*6.5%+ 10000 =$13250

Account 4

Projected amount = 10000*(1+6%)^5 =$13382.26

I would prefer Account 4 because it yields highest Projected amount

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