Posted by **HG** on Thursday, October 22, 2009 at 1:41pm.

Jim wants to deposit money in an account to save for a new stereo system in two years. He wants to have $4,000 available at the time. The following rates are available to him:

6.2% simple interest

6.1% compounded annually

5.58% compounded semiannually

5.75% compounded quarterly

Which account(s) should he choose if he wants to invest the smallest amount of money now? I was thinking the 5.57% compunded quarterly or 5.58% compounded semiannually

How much money must he invest to accumulate $4,000 in two years'time?

- math -
**jim**, Thursday, October 22, 2009 at 3:52pm
Imagine you start with $1 (or $1,000 if you prefer).

How much would you have at the end of two years, under each of the schemes?

For example, under the second, starting with $1, you would have

$1 * 1.06 = $1.061 at the end of the first year

$1.061 * 1.06 = $1.12466 at the end of the second year

So to end with $4000, you'd have to start with $4000 / 1.12466.

Do the same for the others, and you have your answer.

(And yes, it's one of those two.)

## Answer this Question

## Related Questions

- math - Jim wants to deposit money in an account to save for a new stereo system ...
- Math - (a) Themba wants to deposit a sum of money into a savings account so that...
- College level math - Suppose you deposit $100 in an account that earns 0.5% each...
- Finance - You are 45 years of age and your asporation is to retire in 17 years ...
- Interest - In 6 years, Jim wants to have $47,230 to buy a new car. (a) How much ...
- Math - Suppose you deposit $400 in an account that earn 0.75 percent each ...
- Math - Suppose you deposit $400 in an account that earns 0.75 percent each ...
- Business - A. Joe won a lottery jackpot that will pay him $12,000 each year for ...
- math - Zaineb is deciding whether to buy a stereo at $695 plus GST and PST now, ...
- math - Suppose you start saving today for a $30,000 down payment that you plan ...

More Related Questions