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Business, 08.01.2020 06:31 bward04

Scenario:

joe and josephina nestegg wish to invest in a no-risk savings account. they currently have $25,000 in an account bearing 5.25% annual interest, compounded continuously. the following options are available to them:

i. keep the money in the account they currently have

ii. invest the money in an account bearing 5.875% annual interest, compounded annually

iii. invest the money in an account bearing 5.5% annual interest, compounded quarterly

assignment steps:

step #1: determine the equation for the value for the investment as a function of time for each of the three options.

step #2: the couple is hoping to have $35,000 saved for a down payment on a house within six years. calculate the value of each option.

step #3: write a brief summary to the couple that describes the implications of these options.

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Answers: 3

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