Premium Essay

Bus 3062 U2 A2

In: Business and Management

Submitted By tiffanyannefost
Words 872
Pages 4
1 Would you rather have a savings account that paid interest compounded on a monthly basis, or one that compounded interest on an annual basis? Why? Unless you are talking six digits there usually actually isn’t too much of a difference in the end between monthly compounding compared to a year. Looking at this from a savers perspective and a borrowers perspective is two different things. As a saver who like to see my money grow monthly I would definitely be a saver who would vote for monthly compounding. If for some reason there was different interest rates I would want to do the math first to get an idea of what that would mean. If someone is continuously putting money away, saving for something big and not touching it. Usually they want the most out of it possible. The saver would want monthly compounded interest. By the end of 12 months compounded they will be so happy they did not touch it, but they were able to see the fruits of their labor through that year time frame. Usually the savers like to see what they are doing and this make that possible. They are almost getting rewarded each month for putting in more money and making their overall finances grow. The bower on the other hand usually has plans with their money. Every month tit might be different but they rarely just save the money to save it. The borrowers would end up wanting the annually compounded interest that ends up being on an annual basis. The reason why they want that is because through out the year their account will change. Sometimes it will have a large amount, sometimes they will need to take finances and the overall amount will change. They know that by the end of the year the money that has been accumulated was accumulated with what they had at that moment. 2 What is an amortization schedule, and what are some of its uses? An amortization...

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