Ana is looking for a bank to put her son's trust fund in.
Honey, have you heard of compund interest rate.
Bank 1 has a 2.3% interest rate that's compounded semi-annually, twice a year. We plan on giving our son the money when he is 18. Meaning the formula would be: 5,000(1+.023/2)^18x2.The amount after 18 years is=$7,546.44
Two banks that are near her house set up interviews with her.
Bank 2 has a 1.5% interest rate that is compounded monthly, 12 times a year. The money will be used after18 years, so the formula is:5,000(1+.015/12)^18x12The amount after 18 years is=$6,548.72
Ana has no idea what to do with the information that was given to her
Ana tells her husband, Ciel, about her dilemma.
He shows Ana the formula compound interest rate, and how to use them to her benefit
Ana was able to choose a bank with the help of her husband and now her son has a financially ready future.