You want to invest $4,200 at your local bank for 25 years. The banker gives...
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You want to invest $4,200 at your local bank for 25 years. The banker gives you two investment options. Option 1: You can invest in a special account that pays you 9.0% interest each year. However, the interest in this account will not compound. Instead, each year the interest payment is put into a special account that collects no further interest and cannot be reinvested anywhere until the end of the 25 years. Option 2: You can invest in a regular bank account that pays you 4.85% interest each year with compounding interest. That is, each year the interest you earn gets deposited in your bank account and earns interest until the end of the 25 years. Which option should you select and why?
Question 12 options:
Select Option 1: it earns you $4,357.50 more than Option 2.
Select Option 1: it earns you $73.35 more than Option 2.
Select Option 1: it earns you $1,504.80 more than Option 2.
Select Option 2: it earns you $73.35 more than Option 1.
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