Katherine wants to invest $\$40\,000$ into a savings plan. The banker offers her $2$ plans. Plan

Question

Katherine wants to invest $\$40\,000$ into a savings plan. The banker offers her $2$ plans. PlanPlan Summary AInterest of $4\%$ per annum compounded every $ 3$ months over $ 2$ years with $\$100$ immediate cash voucher. BSimple interest of $4.25\%$ per annum over $2$ years. Justify which plan should Katherine invest in.[4]

Accepted Answer

Katherine should invest in Plan A because it yields a slightly higher total return $\$43,414.27$ compared to Plan B $\$43,400.00$, giving a difference of $\$14.27$ in her favor.

Standard Form and Compound Interest - Comparing Simple and Compound Interest Plans

Standard Form and Compound Interest - Comparing Simple and Compound Interest Plans

Solution:

Solution locked

Plan	Plan Summary
A	Interest of \(4\%\) per annum compounded every \( 3\) months over \( 2\) years with \(\$100\) immediate cash voucher.
B	Simple interest of \(4.25\%\) per annum over \(2\) years.