document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1185171>Question 1185171</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Suppose that you have $9000 to<BR>\n" );
document.write( "invest.<BR>\n" );
document.write( "(a) If you invest it with the First National Bank at the nominal rate<BR>\n" );
document.write( "of 5% compounded quarterly, find the accumulated amount at the<BR>\n" );
document.write( "end of one year.<BR>\n" );
document.write( "(b) The First National Bank also offers certificates on which it<BR>\n" );
document.write( "pays 5.5% compounded continuously. However, a minimum<BR>\n" );
document.write( "investment of $10,000 is required. Because you have only $9000,<BR>\n" );
document.write( "the bank is willing to give you a 1-year loan for the extra $1000<BR>\n" );
document.write( "that you need. Interest for this loan is at an effective rate of 8%,<BR>\n" );
document.write( "and both principal and interest are payable at the end of the year.<BR>\n" );
document.write( "Determine whether or not this strategy of investment is preferable<BR>\n" );
document.write( "to the strategy in part (a). </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #815941 by </B><A HREF=/tutors/aboutme.mpl?userid=Boreal><B>Boreal(15235)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Boreal><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/cgi-bin/show-face.mpl?user=Boreal><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=815941\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> This is 9000(1+0.05/4)^4=$9458.51 after 1 year<BR>\n" );
document.write( "-<BR>\n" );
document.write( "This is 10000*e^(0.055)=$10565.41<BR>\n" );
document.write( "1000(1.08)=$1080<BR>\n" );
document.write( "-<BR>\n" );
document.write( "The first leaves you with $9458.51<BR>\n" );
document.write( "The second leaves you with $10565.41-$1080=$9485.41<BR>\n" );
document.write( "This is slightly better (by about $27) than the first. </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );