Question description<\/p>\n
The response has to be like you to are taking about the discussion question with each other and you respond to what he said and state your opinion to what he stated as it pertains to discussion question and offer your thoughts and insight.All work mus be original and no plagiarism
\nDISCUSSION
\nQUESTION:
\nCompounding Interest and the Banker
\nThere are many factors influencing the cost of money
\nfor both individuals and corporations. Suppose you deposit money in an interest
\nbearing account and at the same time borrow a bit of money from the same bank.
\nIn
\nwhich account would the bank apply quarterly compounding factors versus
\nsimple interest? Explain
\nyour choices and your reasoning. You may want to check your personal
\naccounts in regard to this type of transaction.
\nSTUDENT
\n#1 RESPONSE:
\nIf I were to deposit money in an interest bearing account,
\nsuch as my current savings account, this account would earn compound interest.
\nAccording to handsonbanking.org, “If account pays compound interest, that
\nmeans the financial institution will pay you interest not only on your
\noriginal deposit but also on the interest your deposit has earned over
\ntime. With compound interest, your money grows more \u2014 and a lot faster!”
\n(2015). For example, every two weeks, I put $250 directly into my savings
\naccount. This means that monthly, I increase my savings account by $500. Over a
\nmonth’s time, my bank applies earned interest into my savings account. Though
\nit is literally pennies at a time, the bank looks at the current amount that I
\nhave in my savings, and applies compound interest due to the amount at that time.<\/p>\n
As for the account in which I am borrowing money from the same bank, this
\naccount would accrue simple interest. According to investopedia.com,
\n“Simple interest is called simple because it ignores the effects of
\ncompounding. The interest charge is always based on the original principal, so
\ninterest on interest is not included” (2015). This means that if I were to
\nborrow $5,000 at a 2% interest rate, the 2% could be a simple interest, and I
\naccrue interest on the $5,000 that I originally borrowed.<\/p>\n
Reference:
\nhttp:\/\/www.handsonbanking.org\/financial-education\/adults\/the-power-of-compound-interest-2\/<\/p>\n
http:\/\/www.investopedia.com\/terms\/s\/simple_interest.asp
\nSTUDENT
\n#2 RESPONSE:
\nThe bank would apply quarterly compounding interest in
\na savings account because as you save money the interest will earn interest
\n(Foreman, 2012). For example if\u00a0 an account had $200 dollars and at the
\nend of the quarter it had $5 earned in interest the following quarter it would
\nearn interest on $205 as opposed to the original $200. Over time this would
\ngenerate a much larger amount on interest earned then simple interest would.
\nIf someone borrowed money for a car loan for example
\nthrough a bank they would probably use simple interest this is because just as
\nthe amount earned in a savings plan would snowball the same would be true of
\nthe amount owed on a car loan if the interest was compounding. By using a
\nsimple interest rate the borrower is basically paying a flat percentage for the
\namount borrowed. Even though the loans are amortized so that the interest is
\nfrontloaded in the payment schedule the interest rate remains the same. It
\nseems that if banks could get away with it and in order to maximize profits
\nthey would probably reverse the two scenarios so that compound interest is paid
\non a car loan and only simple interest is paid in a savings account.
\nPaul Boling
\nReferences:
\nForeman, G. (2012). 10 Things you need to know about
\ncompound interest. Retrieved 04\/21\/2016 from http:\/\/money.usnews.com\/money\/blogs\/my-money\/2012\/09\/20\/10-things-you-need-to-know-about-compound-interest<\/p>\n","protected":false},"excerpt":{"rendered":"
Question description The response has to be like you to are taking about the discussion question with each other and you respond to what he said and state your opinion to what he stated as it pertains to discussion question and offer your thoughts and insight.All work mus be original and no plagiarism DISCUSSION QUESTION: […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,6515,8569,8567,8568,8570],"tags":[5882,6803,4009,7294,7293],"class_list":["post-47789","post","type-post","status-publish","format-standard","hentry","category-dissertation-writing","category-essay-writing","category-homework-assistance","category-online-assignment-help","category-paper-writing-services","category-write-my-essay-2","tag-best-essays-uk","tag-dissertation-topic-help","tag-do-my-essay-assignment-in-ireland","tag-essay-for-sale-australia","tag-help-with-writing-an-essay"],"_links":{"self":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/47789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/comments?post=47789"}],"version-history":[{"count":0,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/47789\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/media?parent=47789"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/categories?post=47789"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/tags?post=47789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}