Answer:
3.You deposit $1000 in an account that earns 9% annual interest compounded semiannually.
1. You deposit $950 in an account that earns 9% annual interest compounded daily.
2. You deposit $1000 in an account that earns 8% annual interest compounded daily.
4. You deposit $1000 in an account that earns 10% simple interest.
Explanation:
P.S - The exact question is -
To find - Three different accounts are described below. Order the accounts
according to their values after 10 years, from greatest to least.
1. You deposit $950 in an account that earns 9% annual
interest compounded daily.
2. You deposit $1000 in an account that earns 8% annual
interest compounded daily.
3.You deposit $1000 in an account that earns 9% annual
interest compounded semiannually.
4. You deposit $1000 in an account that earns 10% simple interest.
Proof -
1.)
Value after 10 years = 950( 1 + 0.09)¹⁰
= 950 ( 1.09)¹⁰
= 950(2.37) = 2248.995
⇒Value after 10 years = 2248.995
2.)
Value after 10 years = 1000( 1 + 0.08)¹⁰
= 1000 ( 1.08)¹⁰
= 1000(2.159) = 2158.925
⇒Value after 10 years = 2158.925
3.)
As it is compounded semiannually , so time period is doubles and rate goes half.
Value after 10 years = 1000( 1 + 0.045)²⁽¹⁰⁾
= 1000 ( 1.045)²⁰
= 1000(2.412) = 2411.714
⇒Value after 10 years = 2411.714
4.)
Value after 10 years = 1000×
×10 = 1000
∴ we get
2411.714 > 2248.995 > 2158.925 > 1000
⇒ 3.) > 1.) > 2.) > 4.)
So,
3.You deposit $1000 in an account that earns 9% annual interest compounded semiannually.
1. You deposit $950 in an account that earns 9% annual interest compounded daily.
2. You deposit $1000 in an account that earns 8% annual interest compounded daily.
4. You deposit $1000 in an account that earns 10% simple interest.