Christopher wins $1000 in a competition. He decides to invest his money. His financial advisor gives him three options: Option

Question

Christopher wins $1000 in a competition. He decides to
invest his money. His financial advisor gives him three
options:
Option 1: An interest payment of $15 every year
Option 2: An interest payment of 2% per year,
compounded annually.
Option 3: An interest payment of 1.6% per year,
compounded monthly.
a) Calculate the value of Christopher's investment after 5
years if he invests in
i) Option 1
ii) Option 2
iii) Option 3
(5 marks)
Option 2 is a high risk investment compared to Option 3.
Christopher decides to invest $400 in option 2 and the rest
in option 3.
b) Find the number of complete years Christopher will have
to wait in order to earn at least $250 interest. (4
marks)

Kunduz · Accepted Answer

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