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You are considering investing $1,000 at an interest rate of 6.5% compounded annually for five years or investing the $1,000 at 6.8% per year simple interest for five years. Whic option is better? The future value of Option 1 (6.5% compounded annually) is $ (Round to the nearest dollar.) The future value of Option 2 (simple interest of 6.8% per year) is $ (Round to the nearest dollar.) Select the correct choice from the drop-down menu below. (1) is better. (1) O Option 1 O Option 2

You are considering investing $1,000 at an interest rate of 6.5% compounded annually for five years or investing the $1,000 at 6.8% per year simple interest for five years. Whic option is better? The future value of Option 1 (6.5% compounded annually) is $ (Round to the nearest dollar.) The future value of Option 2 (simple interest of 6.8% per year) is $ (Round to the nearest dollar.) Select the correct choice from the drop-down menu below. (1) is better. (1) O Option 1 O Option 2

Database System Concepts
Database System Concepts
7th Edition
ISBN:9780078022159
Author:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan
Publisher:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan
Chapter1: Introduction
Section: Chapter Questions
Problem 1PE
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1. You are considering investing $1,000 at an interest rate of 6.5% compounded annually for five years or investing the $1,000 at 6.8% per year simple interest for five years. Which option is better? The future value of Option 1 (6.5% compounded annually) is $ (Round to the nearest dollar.) The future value of Option 2 (simple interest of 6.8% per year) is $ (Round to the nearest dollar.) Select the correct choice from the drop-down menu below. (1) is better. (1) O Option 1 O Option 2
Transcribed Image Text:1. You are considering investing $1,000 at an interest rate of 6.5% compounded annually for five years or investing the $1,000 at 6.8% per year simple interest for five years. Which option is better? The future value of Option 1 (6.5% compounded annually) is $ (Round to the nearest dollar.) The future value of Option 2 (simple interest of 6.8% per year) is $ (Round to the nearest dollar.) Select the correct choice from the drop-down menu below. (1) is better. (1) O Option 1 O Option 2
Expert Solution
Analysing Investment through Simple Interest

Simple Interest = Initial Investment × Rate of Return% × Time100

where

Initial Investment = $1000

Rate = 6.8%

Time = 5

S.I. = 1000 × 6.8 × 5100

S.I. = $340

Final Amount = $1000 + $340 = $1340

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