Question

the Albina Community Bank or in the Umpqua Bank. Albina offers a 12% rate compounded quarterly, and Umpqua offers 14% compounded semiannually. Tamra has $40,000 to invest and expects to withdraw the money at the end of five years. Using the tables found in your textbook, determine which one of the following is the best deal.

Answer 1

Given that Tamra has $40,000 to invest now and expects to withdraw the money at the end of 5 years and is choosing the best deal between Albina Community Bank which offers 12% rate compounded quarterly and Umpqua Bank with 14% compounded semiannually, she'd rather choose the Albina Community Bank because at the end of five years, she can withdraw a total of $385,852 while with Umpqua Bank it only amounts at $148,289.