Mastura wishes to invest RM8,000 in a fixed deposit account for one year. She has two...

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Mastura wishes to invest RM8,000 in a fixed deposit account for one year. She has two...

Mastura wishes to invest RM8,000 in a fixed deposit account for one year. She has two options: Maybank which offers 3.35% interest compounded annually. CIMB Bank which offers 3.3% interest compounded semi-annually. Which bank should Allan choose? Give your reason.

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Answer 1

Answer #1

Future value of an investment is found using the following equation

Future value of an investment = Present value x (1 + interest rate)

Future value of investment in Maybank RM 8000 x (1 + 0.0335)

Value of investment in Maybank = RM 8,268.00

2x1 Future value of investment in CIMB bank = RM 8000 x 0.033 1+ 2

Value of investment in CIMB bank = RM 8,266.18

Allan should choose Maybank because the value of investment in Maybank is higher than the value of investment in CIMB bank.

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Answer 2

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