You find that Bank of America is offering to double your savings in 9 years, Citibank's is offering to triple your savings in 16 years, while the US Bank is offering to quadruple your savings in 19 years. You are required to compute and explain with illustration, which bank is offering you the highest interest rate on their savings account. Hint: To compare the interest rates offered by Bank of America, Citibank, and US Bank, we can use the compound interest formula:

FV = PMT*(1+i/n)^t

Where:

FV = future value of the investment, including interest

PV = present value of initial principal investment amount

I = annual interest rate (APR)

N = number of compounding periods per year

T = time period of investment/borrowing

Rearranging to get annual interest rate, we have:

I = n*[(FV/PV)^1/nt - 1]

For comparing interest rates, we need to compute annual interest rates for each bank based on the given information.

2. Bank of America: doubling savings in 9 years
4. Citibank: tripling savings in 16 years
6. US Bank: quadrupling savings in 19 years

Bank of America: t = 9, n = 1

Citibank: t = 16, n = 1

US Bank: t = 19, n = 1

Bank of America

iBoA = [(2/1)^1/9 - 1]

CitiBank

Citi = [(3/1)^1/16 - 1]

US Bank

iUSB = [(4/1)^1/19 - 1]

Calculate and compare interest rates for each bank.

Answer rating: 100% (QA)

Youre absolutely right We can use the compound interest formula and annualize the interest rates to compare the offers from each bank Heres the breakd... View the full answer