Question

Melvin Indecision has difficulty deciding whether to put his savings in Mystic Bank or Four Rivers Bank. Mystic offers 16% interest compounded semiannually. Four Rivers offers 8% interest compounded quarterly. Melvin has $12,100 to invest. He expects to withdraw the money at the end of 4 years. Calculate interest for each bank and identify which bank gives Melvin the better deal? (Use the Table provided.) (Do not round intermediate calculations. Round your answer to the nearest cent.) Interest Mystic Four Rivers Better deal Mystic Bank $ $

Answer 1

n P= 12100$ mystic bank 8=16%. Compounded semiannually by compounded quately bank r= foul sin t = 4yn mystic bank r= 16 = 8% 2 na 4X2 =B cp = P x interest toetay - 12100 x 1.8509 interest 10295.89 12100 x 1.850g - 12100 8= towy silney bank Q = 24. n=4X4 16 ср : px interest factus 12100 X 1.3728 4510.8814 intesst 12100 x 1.3728 - 12100 = better deal I mystic bank