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Advantage in compounding is exactly balanced by its fee

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Suppose you had €10,000 to invest for one year. You are deciding between a savings account at UBS that will pay a 2% annual interest rate compounded daily (UBS) and one at Credit Suisse that will also pay 2% but compounded monthly (Credit Suisse). You are about to invest with UBS but then you realize there are some fees attached to this product. Credit Suisse has no fees. What is your point of indifference? In other words, how much could UBS charge before its advantage in compounding is exactly balanced by its fee? Show and explain all supporting calculations!

Reference no: EM132468075

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