Evan has $560 to spend at a bicycle store for some new gear and biking outfits. Assume all prices listed include tax.
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Jane must therefore deposit her savings in the four rivers bank.
<h3>What is compound interest?</h3>Interest that is added to a loan and deposit sum is known as compound interest. In our everyday lives, it is the notion that is employed the most frequently. Compound interest is calculated as a sum using the interest and principal accrued over time. Compound interest versus simple interest differ primarily in this way.
As per the data provided in the question,
Rate, r = 12%
After five years, the total amount, if Jane had saved at Mystic Bank,if Jane had saved at Mystic Bank would be:
For compounded quarterly,
n = 5 × 4
n = 20
A = 40000(1 + 12/(4 × 100))²⁰
A = 72244.44 (i)
If Jane placed her savings with the Four Rivers, then,
A = 40000(1 + 14/(2 × 100))¹⁰
A = 40000 × 1.9671
A = 78686.054 (ii)
Therefore, it is evident that case (ii) is higher than case (i). Jane must therefore deposit her savings in the four rivers bank.
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