Compound Interest Folio

Due Date: 07/08/2015

Introduction:

Mathematical Investigation:

Task 1

Analysis/Discussion:
Task 1

What is the balance of each investment after 10 years and how much interest was
earned in each account?
Which interest rate earns the most interest for the first 4 years? Why do you think this is
the case?
Discuss the difference between and and compare the two graphs
What are the advantages and disadvantages of each option?
If this investment was to continue, which option provides the best option? Justify your
choice.
The balance for option one at 10 years was $3,150.00 and for option 2 it came it to
$3,211.00. For option 1 the interest earned was calculated to $1,150.00 at 10 years and
option 2 came to $1,221.55. Therefore, Option 2 earned the highest interest by $71.55.
At four years the option 1s interest rate earned the highest interest at $460.00, while
option 2 earned $417.15. This shows that option 1 is more efficient for a short term,
however Option 2 is better in the long term. Although Option 2s interest rate was 4.85%
annually, the interest that was earned was higher than Option 1 as compounding is

Task 2
How did changing the compunding period change the investment?
Did your calculations match those in the spreadsheet? Why/why not?