SOLUTION: Jane is having difficulty deciding whether to put her savings in the Mystic Bank or in the Four Rivers Bank. Mystic offers a 12 percent rate compounded quarterly while Four Rivers

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Question 662186: Jane is having difficulty deciding whether to put her savings in the Mystic Bank or in the Four Rivers Bank. Mystic offers a 12 percent rate compounded quarterly while Four Rivers offers 14 percent compounded semiannually. Jane has $40,000 to invest and expects to withdraw the money at the end of five years. (Use the tables in the handbook) The best deal is: (Points : 2)
Four Rivers
Four Rivers for 1st two years
Mystic
Mystic for last two years
None of these
Answer by ewatrrr(24785) About Me  (Show Source):
You can put this solution on YOUR website!
 

Hi,

 In General A+=+P%281%2Br%2Fn%29%5E%28nt%29

A = Accumulated Amount

P= principal = 40,000

r= annual rate = .12 0r .14

n= periods per year = 4 0r 2

t= years = 5

 A=+40000%281.03%29%5E%2820%29 0r   A=+40000%281.07%29%5E%2810%29

   $72,244,45  0r $78,686.05

check the arithmetic and make Your conclusion