Question 314520
.Which of the following two investment options should she choose? Justify your reasoning.
Option 1: 6% compounded semi-annually
A(t) = P(1+(0.06/2))^(2t)
A(1) = P(1.03)^2
A(1) = P(1.0609)
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Option 2: 7.5% simple interest 
A(t) = P(1+rt)
A(1) = P(1+0.075)
A(1) = P(1.075)
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Answer: It depends on how many years you leave
the money in the investment plan.
From the work above the simple iinterest is better
for one year.  But in the long run the compound
interest plan will be a better investment.
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Cheers,
Stan H.