Compute the future value of savings

Reference no: EM1359841

You just received a gift of $500 from your grandmother and you are thinking about saving this money for graduation, which is four years away. You have your choice between Bank A, which is paying 7% for one-year deposits, and Bank B, which is paying 6% on one-year deposits. Each bank compounds interest annually.

a. What is the future value of your savings one year from today if you save your money in Bank A? Bank B? Which is the better decision?

b. What savings decision will most individuals make? What likely reaction will Bank B have?

Reference no: EM1359841

Questions Cloud

Explain program of factory audits instead of trying : Explain program of factory audits instead of trying to set up its own supplier monitoring and compliance effort?

Interaction between hormones and behavior : Explain the interaction between hormones and behavior, and how these interactions affect the determination of gender identity.

Square box project rate of return : Square Box Project Rate of Return - percent rate of return and has a required discounted payback period of 3.5 years

With what speed will the dart leave the gun : what speed will the dart leave the gun.

Compute the future value of savings : Suppose you just received a gift of $500 from your grandmother and you are thinking about saving this money for graduation, which is four years away. You have your choice between Bank A, which is paying seven percent for one-year deposits,

Explain what was the significance of global competition : Explain What was the significance of global competition in the IT decisions and Discuss the issues relating to software development and applications

Understand research methods : Testing hypotheses and theories versus generating hypotheses and building theory and what are two rationales for using a mixed methods approach?

Importance of research in the psychology : Research is an important part of psychology because, as professionals, we will always have to expand our knowledge and learn about new information that is coming out in order to have the most impact in the field.

Find out the angle of the thread : Find out the angle of the thread. If the locomotive can exert a constant pull of 8.36E+5 N, how long does it take to increase the speed of the train from rest to 80.7km/hr.

User Account

All Pages