Asked by Jamie Williams on Jul 14, 2024
Verified
Joan has savings of $12,000 on June 1. Since she may need some of the savings during the next 3 months, she is considering two options at her bank. (1) An Investment Builder savings account earns a 0.25% rate of interest. The interest is calculated on the daily closing balance and paid on the first day of the following month. (2) A 90- to 179-day cashable term deposit earns a rate of 0.8%, paid at maturity. If simple interest rates do not change and Joan does not withdraw any of the funds, how much more will she earn from the term deposit up to September 1? (Keep in mind that savings account interest paid on the first day of the month will itself subsequently earn interest during the subsequent month.)
Investment Builder
A financial tool or account that aids individuals in growing their savings through various types of investments.
Term Deposit
A fixed-term investment held at a financial institution that pays interest until a specified maturity date.
Simple Interest Rates
The rate at which interest is calculated solely on the initial amount of capital, without compounding.
- Evaluate the interest yielded or charged across a given period, with consideration for altering rates and principal figures.
- Investigate different investment choices by comparing simple interest rates and anticipated outcomes.
Verified Answer
MC
Learning Objectives
- Evaluate the interest yielded or charged across a given period, with consideration for altering rates and principal figures.
- Investigate different investment choices by comparing simple interest rates and anticipated outcomes.