Example 3

Stan is trying to choose the best savings account for his business. Stan has 10,000 that he needs to invest for the next two years in a savings account for emergency situations. Stan has three options to choose from: Bank 1: Offers 2.5% interest accruing quarterly. Bank 2: Offers 3% interest accruing semi-annually. Bank 3: Offers 2% interest accruing monthly. Which is the best option for Stan if he wants to make the most of his funds? If you were a bank, which of the three offers would be best for you? Why would you want to offer this interest rate? Justify your answer.
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