AZX company intends to deposit RM30,000 per year in a fixed  deposit account for the next 10 years, and the fixed deposits pays an  annual interest rate of 8%. He has three options to choose on the  depositing frequency. 

• RM30,000 is deposited annually and the fixed deposits pays interest  annually. 

• RM15,000 is deposited semiannually and the fixed deposits pays interest semiannually. 

• RM7,500 is deposited quarterly and the fixed deposits pays interest  quarterly. 

1) Compute the future value that AZX company will have at the end of 10  years for each option. 

2) Recommend which option should AZX choose if AZX company  wishes to receive the highest amount taking into consideration of the  effect of more frequent deposits and compounding of interest on the  future value of an annuity.  

Answer rating: 100% (QA)

To solve this problem well use the future value of an annuity formula for each option taking into ac... View the full answer