Answer to Question #212638 in Finance for Tati

Question #212638

Nelson has been working for few years and earnings $42,000 per annum. He would like to save some of his money for his wedding. He has shortlisted his choices to the following fixed deposits:

i) Maybank Fixed Deposit (interest rate for 12months: 1.85%, 36months: 1.90%)

ii) Public Bank eFixed Deposit (interest rate for 12months: 1.85%, 36months: 1.85%)

You are required to calculate his fixed deposits account balance as at 31 December 2023 in both banks and state your recommendation with justification based on the following conditions:


a) he deposits $5,000 on 1 January 2021 and hold for three years until 31 December 2023.


b) he deposits $2,500 on 1 January 2021 and 1 January 2022.


c) he deposits $1,000 on 1 January 2021, $1,500 on 1 January 2022 and $2,500 on 1 January 2023.


Note: You are required to calculate the amount in his account after three years based on the above chosen banks latest interest rate


1
Expert's answer
2021-07-01T13:21:40-0400

Here,

1) Maybank Fixed Deposit (interest rate for 12months: 1.85%, 36months: 1.90%)

ii) Public Bank e-Fixed Deposit (interest rate for 12months: 1.85%, 36months: 1.85%)

Note: Here, Interest Rate for 24 months is not given, so we consider 12 months interest rate in the case when deposit is made for 24 months.


a) Calculation of Amount in the account for three years in condition-a:

Calculation of Amount in the account for three years in condition-a:

Workings:





Calculations:




b) Calculation of Amount in the account for three years in condition-b:

Calculation of Amount in the account for three years in condition-b:

Workings:





Calculations:





c) Calculation of Amount in the account for three years in condition-c:

Calculation of Amount in the account for three years in condition-c:

Workings:




Calculations:



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