18. Suppose you know that you will need $2,500 two years from now in order to...

 

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18. Suppose you know that you will need $2,500 two years from now in order to make a down payment on a car. a. BankOne is offering 4% interest (compounded annually) for two-year accounts and BankTwo is offering 4.5% (compounded annually) for two-year accounts. If you know you need $2,500 two years from today, how much will you need to invest in BankOne to reach your goal? Alternatively, how much will you need to invest in BankTwo? Which bank account do you prefer? b. Now suppose you do not need the money for three years. How much will; to deposit today in BankOne? BankTwo? you need 18. Suppose you know that you will need $2,500 two years from now in order to make a down payment on a car. a. BankOne is offering 4% interest (compounded annually) for two-year accounts and BankTwo is offering 4.5% (compounded annually) for two-year accounts. If you know you need $2,500 two years from today, how much will you need to invest in BankOne to reach your goal? Alternatively, how much will you need to invest in BankTwo? Which bank account do you prefer? b. Now suppose you do not need the money for three years. How much will; to deposit today in BankOne? BankTwo? you need

Answer rating: 100% (QA)

a To determine how much you need to invest in each bank you can use the formula Future Value Present ... View the full answer