Asked by josh
Ms Desai has $18 000 to invest and is looking at GICs.
• Option A: 5-year GIC at 2.45%, compounded annually.
• Option B: 2-year GIC at 2.2%, compounded annually; reinvest funds in a 3-year GIC at 3.5%, compounded annually.
Compare the future values of each option. Which option should Ms Desai choose? What assumptions are you making?
• Option A: 5-year GIC at 2.45%, compounded annually.
• Option B: 2-year GIC at 2.2%, compounded annually; reinvest funds in a 3-year GIC at 3.5%, compounded annually.
Compare the future values of each option. Which option should Ms Desai choose? What assumptions are you making?
Answers
Answered by
Steve
well, the values are (omitting the 18000, since it does not affect the relative sizes)
A: 1.0245^5
B: 1.022^2*1.035^3
so, which is greater?
A: 1.0245^5
B: 1.022^2*1.035^3
so, which is greater?
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