Finance Finance Basics : Selection of compound intervals

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					              Sub: Finance                                                                            Topic: Finance Basics



              Question:
              At various interests compounding intervals select the best option.
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              Choose the correct answer from the given option.



              Solution:

              1.      You have $10,000 to invest. You do not want to take any risk, so you will put
                      the funds in a savings account at the local bank. Of the following choices,
                      which one will produce the largest sum at the end of 22 years?
                      a. An account that compounds interest annually.
                      b. An account that compounds interest daily.
                      c. An account that compounds interest quarterly.
                      d. An account that compounds interest monthly.
              Answer:

              Particulars                                                                                                  Amount

              Amount to be invested (a)                                                                                    $10,000

              Number of years (n)                                                                                                  22

              Annual rate of interest (Assumed) (r)                                                                             10%

              Future value if compounded daily (a X (1 + r/365)365n) 
				
DOCUMENT INFO
Description: Compute the amount yearly loan repayment. : Harry just bought a new four-wheel-drive Jeep Cherokee for his lumber business.
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