Learning Goals 2, 5
ST5–1 Future values for various compounding frequencies Delia Martin has $10,000 that she can deposit in any of three savings accounts for a 3-year period. Bank A compounds interest on an annual basis, bank B compounds interest twice each year, and bank C compounds interest each quarter. All three banks have a stated annual interest rate of 4%.
What amount would Ms. Martin have after 3 years, leaving all interest paid on deposit, in each bank?
What effective annual rate (EAR) would she earn in each of the banks?
On the basis of your findings in parts a and b, which bank should Ms. ...