Jane Is Having Difficulty Deciding Whether to Put Her Savings

question 11

Multiple Choice

Jane is having difficulty deciding whether to put her savings in the Mystic Bank or in the Four Rivers Bank. Mystic offers a 12% rate compounded quarterly, and Four Rivers offers 14% compounded semiannually. Jane has $40,000 to invest and expects to withdraw the money at the end of five years. (Use the tables in the handbook.) The best deal is:

• A)Four Rivers
• B)Four Rivers for first two years
• C)Mystic
• D)Mystic for last two years
• E)None of these