posted by Maddy on .
Jason Printing has $85,000 to invest. They can invest in Wilder Revenue at 10% compounded semiannually or at Cheapskate Investments at 9.8% compounded monthly.
a) Calculate the two APYs and compare them to determine your answer. Make sure to distinguish which APY belongs to which bank. At which bank should they invest?
b) If they were to invest this money for ten years. How much more will they earn if investing with your choice from part a? Compare the two future values.
1.05^2 - 1 = 10.25 APY Wilder
1.0081666^12 - 1 = 10.2524 APY Cheapskate
so go with cheapskate
*85,000 = 225,530.30
1.0008166667^120 = 2.65387
*85,000 = 225,579.18
Cheapskate is 48.88 better