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?
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?
1 answer
1 answer