Posted by **tracy** on Monday, October 24, 2011 at 9:03pm.

Suppose that you were saving money over 5 years to use in a purchase later. You have $1000 to put in the savings. After surveying several banks for savings plans, you found these options. "A" stands for the amount you will have in the bank after x years.

*

Option A: Your money would receive simple interest at the end of 5 years.

The formula is A = 1000 + 1000(0.05) x.

*

Option B: Your money will be compounded continuously.

The formula is A = (1000)(2.71828)(0.05 x).

*

Option C: You will invest in a CD (Certificate of Deposit) compounded yearly.

The formula is A = (1000)(1.05) x.

*

Option D: Buy a US Savings Bond. Buy at $1000 now.

When cashed in 5 years later, the amount will be $1267.

Calculate each of these. You can find this by substituting x = 5 in each formula. Note that there is no formula in the US Savings Bonds option, just the amount.

Post a response with your answers to the following questions.

1. What is the order of Options A, B, C, and D, listing the option which gives the greatest amount at the end of 5 years to the least?

2. Which option gave you the greatest amount at the end of the five years?

3. What was the amount you calculated with this option?

## Answer this Question

## Related Questions

- Civics - Which best describes how the money that individuals have in savings ...
- Civics - Which best describes how the money that individuals have in savings ...
- Civics - Which best describes how the money that individuals have in savings ...
- Math - (a) Themba wants to deposit a sum of money into a savings account so that...
- statistics - A U.S. government report stated that, “With bank interest rates ...
- History - the stock market crash weakened the nation's banks because of what? I ...
- Math - Mary B deposits $8500 into a savings account, compounded monthly at a ...
- math: ratios - By the end of the year Kieran's savings is 9/2 of Simon's savings...
- alegebra / math - How much more money? The ratio of Beatriz’s savings to Hannah’...
- math - in march, the savings of oliver, asia, hassan, and abby was $1440. in ...