Question

Bank Maju Jaya gives 5% interest with an annual interest rate scheme

to customers who deposit their money at the bank. Another bank

, Bank Makmur Sentosa, gives 5% interest with an interest rate scheme

quarterly. Mr. Yamamichi will deposit IDR

30,000,000 for 3 years. In which bank should he deposit his money

to get a larger amount of money at the end of year 3?

Answer 1

Bank Maju Jaya:

We use the formula:  
A=P(1+r/100)^n
where   
A=future value
P=present value  
r=rate of interest
n=time period.   

A=30,000,000*(1.05)^3

=30,000,000*1.157625

=34,728,750

Bank Makmur Sentosa:

We use the formula:  
A=P(1+r/4)^4n
where   
A=future value
P=present value  
r=rate of interest
n=time period.   

A=30,000,000*(1+0.05/4)^(4*3)

=30,000,000*1.16075452

=34,822,635.53(Approx)

Hence larger money would be for Bank Makmur Sentosa