Ben deposits $2,500 into an account paying 5 percent interest, compounded annually. At the same time,...

Ben deposits $2,500 into an account paying 5 percent interest, compounded annually. At the same time, Mike deposits $2,500 into an account paying 2.5 percent interest, compounded annually. At the end of five years:

A. Ben will have earned somewhere between 1 and 2 times the amount of interest that Mike earned.

B. Both Ben and Mike will have earned the same amount of interest.

C. Ben will have earned exactly twice the amount of interest as Mike earned.

D. Ben will have earned more than twice the amount of interest that Mike earned.

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

(a) Eighteen months ago, Aishah deposited RM1500 in a savings account earning 5% interest compounded semi-annually. At the same time, she ...

(a) Eighteen months ago, Aishah deposited RM1500 in a savings account earning 5% interest compounded semi-annually. At the same time, she deposited RM150 at the end of every month in another account earning 3% interest compounded monthly. Today, she intends to withdraw all her money from both accounts to pay part of the 10% down payment for a new motorcycle. The cash price of the motorcycle is RM54000.How much is the total withdrawal from both accounts?Aishah plans to take up...

Starting today, a series of annual deposits is made into an account offering 8 percent compounded annually.

Starting today, a series of annual deposits is made into an account offering 8 percent compounded annually. The first deposit is $2,000. The second deposit is 2 percent smaller than the first, that is, $2,000 (0.98)^1. The third deposit is 2 percent smaller than the second, that is, $2,000 (0.98)^2. This pattern of declining deposits, with each deposit being 2 percent smaller than the previous one, continues until the last deposit is made at the end of year 40, that...

An engineer deposits $500 semiannually in his savings account for 5 years at 8% interest compounded...

An engineer deposits $500 semiannually in his savings account for 5 years at 8% interest compounded semiannually. Then, for 6 years he makes no deposits or withdrawals. The amount in the account after 11 years is about? A. $9726 B. $9526 C. $9626 D. $9826

Starting on October 1, 2002, annual deposits of $145 are made into an account paying interest at a rate of 7.8% compounded monthly.

Starting on October 1, 2002, annual deposits of $145 are made into an account paying interest at a rate of 7.8% compounded monthly. How much is in the account immediately after the deposit on October 1, 2031? Please show all steps and be very clear thankyou

a company deposits 3700 a month into an account that earns 9% interacest compounded semi annually...

a company deposits 3700 a month into an account that earns 9% interacest compounded semi annually how much money will the company have accumulated in 6 years assume no interperiod compunding

A company borrowed $16,000 paying interest at 9% compounded annually. If the loan is repaid by...

A company borrowed $16,000 paying interest at 9% compounded annually. If the loan is repaid by payments of $ 1800 made at the end of each year, construct a partial amortization schedule showing the last three payments, the total paid, and the total interest paid. Complete the table below for the last three payments. (Do not round until the final answer. Then round to the nearest cent as needed.) Payment Number Amount Paid Interest Paid Principal Repaid Outstanding Principal 17...

Bank A pays 2% interest compounded annually on deposits, while Bank B pays 1.75% compounded daily....

Bank A pays 2% interest compounded annually on deposits, while Bank B pays 1.75% compounded daily. What would be the effective annual rate (EAR) that you would earn if you chose to deposit money in Bank B? Provide your answer in percentage format without using the % sign. Round to two decimal places. To be marked correct, the answer provided needs to be +/- 0.01 from the actual answer.

Bank A pays 7% interest compounded annually on deposits, while Bank B pays 6% compounded daily....

Bank A pays 7% interest compounded annually on deposits, while Bank B pays 6% compounded daily. a. Based on the EAR (or EFF%), which bank should you use? You would choose Bank A because its EAR is higher. You would choose Bank B because its EAR is higher. You would choose Bank A because its nominal interest rate is higher. You would choose Bank B because its nominal interest rate is higher. You are indifferent between the banks and your...

Sandra Smith deposited $2,200 today in an account paying 6 percent interest annually. 1. What would...

Sandra Smith deposited $2,200 today in an account paying 6 percent interest annually. 1. What would be the simple interest earned on this investment in 5 years? Simple interest on investment $ 2. With annual compounding, how much interest-on-interest would Sandra earn in 5 years? Interest-on-interest $

Jamie deposits $10,000 in an account earning 3% interest, compounded quarterly. How much will the account...

Jamie deposits $10,000 in an account earning 3% interest, compounded quarterly. How much will the account balance be in 10 years? $13,483.48 $22,879.28 $12,327.12 $14,724.14

Subjects