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Q2a   Please assist to answer Q2 a in detail

Q2a   Please assist to answer Q2 a in detail

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Q2a

 

Please assist to answer Q2 a in detail 

2. (a) Explain why the understanding of time value of money calculations is important in areas of accounting, management, marketing, and operations. Provide relevant examples to support your explanation. (b) Peter has RM10,000 that he can deposit in any 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 Peter have at the end of the third year, leaving all interest paid on deposit, in each bank? On the basis of your findings, which bank should Peter choose? Why?
Transcribed Image Text:2. (a) Explain why the understanding of time value of money calculations is important in areas of accounting, management, marketing, and operations. Provide relevant examples to support your explanation. (b) Peter has RM10,000 that he can deposit in any 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 Peter have at the end of the third year, leaving all interest paid on deposit, in each bank? On the basis of your findings, which bank should Peter choose? Why?
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