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July 2, 2015

Homework Help: Math

Posted by Kate on Thursday, July 14, 2011 at 8:01am.

The winner of a popular lottery is offered one of two options:
i) a lump sum of $102 500
ii) $1000 every month for 10 years
If the money can be invested at 3.0% p/a, compounded monthly, which option should the winner choose? Justify your reasoning.

Every three months, Carlos deposits $400 in an account bearing 5.6% p/a, compounded quarterly. After 5 years, Carlos stops making regular deposits, but leaves the money in the account for another 2 years. How much money is in the account at the end of the 7 years?

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