Answer to Question #56756 in Management for Mueni

Question

Tom Mapesa has Sh. 500,000/= that he can deposit in any of three savings accounts for 3 years period. Bank A compounds interest on an annual basis, Bank B compounds interest twice each year, Bank C compounds interest each quarters. All three banks have a stated annual interest of 8%.
a) Compute the amount in each bank account at end of 3 years.
b) In which bank should Tom deposit his money?
c) Bank D is different from the others in that it compounds continuously. What would be the amount at end of 3 years if deposited in Bank D?