Functions Modeling Change: A Preparation for Calculus, 5th Edition

Published by Wiley
ISBN 10: 1118583191
ISBN 13: 978-1-11858-319-7

Chapter 4 - Exponential Functions - 4.5 The Number e - Exercises and Problems for Section 4.5 - Exercises and Problems - Page 174: 39

Answer

From best to worst, we have Bank B, Bank C, Bank A.

Work Step by Step

Compute and compare the rate of return. For Bank A, $P=P_0\left(1+\frac{0.02}{365}\right)^{365(1)} \approx 1.0202 P_0$ For Bank B, $P=P_0\left(1+\frac{0.021}{12}\right)^{12(1)} \approx 1.0212P_0$ For Bank C, $P=P_0\left(e^{0.0205(1)}\right) \approx 1.02071 P_0$ From best to worst, we have Bank B, Bank C, Bank A.
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