document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=314520>Question 314520</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Fashima has $8000 to invest in an RESP(Registered Education Savings Plan) for seven years.Which of the following two investment options should she choose? Justify your reasoning.<BR>\n" );
document.write( "Option 1: 6% compounded semi-annually<BR>\n" );
document.write( "Option 2: 7.5% simple interest\r<BR>\n" );
document.write( "\n" );
document.write( "I'd really appreciate it if someone could help me out. I'm assuming they're asking in which option will she make the most investment after 7 years? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #224897 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=224897\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> .Which of the following two investment options should she choose? Justify your reasoning.<BR>\n" );
document.write( "Option 1: 6% compounded semi-annually<BR>\n" );
document.write( "A(t) = P(1+(0.06/2))^(2t)<BR>\n" );
document.write( "A(1) = P(1.03)^2<BR>\n" );
document.write( "A(1) = P(1.0609)<BR>\n" );
document.write( "----------------------------<BR>\n" );
document.write( "Option 2: 7.5% simple interest <BR>\n" );
document.write( "A(t) = P(1+rt)<BR>\n" );
document.write( "A(1) = P(1+0.075)<BR>\n" );
document.write( "A(1) = P(1.075)<BR>\n" );
document.write( "-------<BR>\n" );
document.write( "Answer: It depends on how many years you leave<BR>\n" );
document.write( "the money in the investment plan.<BR>\n" );
document.write( "From the work above the simple iinterest is better<BR>\n" );
document.write( "for one year.  But in the long run the compound<BR>\n" );
document.write( "interest plan will be a better investment.<BR>\n" );
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document.write( "Cheers,<BR>\n" );
document.write( "Stan H. </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );