Question

A person wants to invest ​$24,000 for 2 years and is considering two different investments. The first​ investment, a money market​ fund, pays a guaranteed 6.7​% interest compounded daily. The second​ investment, a treasury​ note, pays 6.8​% annual interest. Which investment pays the most interest over the 2​-year ​period?

Answer 1

The first​ investment in money market​ fund.

Step-by-step explanation:

The first​ investment, a money market​ fund, pays a guaranteed 6.7​% interest compounded;

Compound Interest Calculation

=
`P [(1 + i)^(2) -1]`

=
`24000 [(1 + 0.067)^(2) -1]`

=$27,323.74 - $24,000

=$3,323.74

The person will get a total interest of $3,323.74 in 2 years

The second​ investment, a treasury​ note, pays 6.8​% annual interest

=​$24,000 * (6.8/100) = ​$1,632

= $1,632 * 2 = $3,264

The person will get a total interest of $3,264 in 2 years

With the above computations. It will be favourable if the person invested in the money market fund.