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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?

• math -

consider the amount of \$1 at the end of 2 years

at 6.2% simple ---- 1 + (1)(.062)(2) = \$1.124
at 6.1 comp. annually ---- (1.061)^2 = \$1.1257
at 5.58% com. semi --- (1.0279)^4 = \$1.11636
at 5.75% comp. quarterly -- (1.014375)^8 = 1.12096

so what do you think?

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