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Femme_physics
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Homework Statement
In a certain bank they offer 2 saving plans
Plan A gives yearly interest of 5%, and you can invest in this plan only in units of full year.
Plan B gives a biyearly interest of 10% and you can invest in this porgram in units of 2 full years.
A man has decided to invest his money in plan B for 4 years, and at the end of this period to invest one full year at plan A all the money he's saved on plan B.Would he have saved more money if he had invested all his money to a period of 5 years on plan A. Explain.
Homework Equations
eumyang has shown me an interesting formula to solve such questions
eumyang said:I think you have to use the compound interest formula
[tex]A(t) = A_0 \left(1 + \frac{r}{n} \right)^{nt}[/tex]
where
A0 = the principal
t = time in years
n = number of compounding periods per year (monthly: n = 12; quarterly: n = 4...)
r = interest rate expressed as a decimal