You have received a bonus of $5000 that you would like to invest. You have three options. BMO savings account which earns 15 percent compounded daily; td savings account which earns 15.5 percent compounded quarterly and cibc savings account which earns 16 percent compounded annually. Which would you chose and why???
Ans We choose td savings account which earns 15.5 percent compounded quarterly since it has highest Future Value.
| 1) BMO | FV = | PV (1 + r )^n |
| FV = | 5000*(1+15%/365)^365 | |
| FV = | 5808.99 | |
| 2) TD | FV = | PV (1 + r )^n |
| FV = | 5000*(1+15.5%/4)^4 | |
| FV = | 5821.22 | |
| 3) CIBIC | FV = | PV (1 + r )^n |
| FV = | 5000*(1+16%)^1 | |
| FV = | 5800.00 | |
You have received a bonus of $5000 that you would like to invest. You have three...