Explain why understanding of time value of money calculation

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Question (a) Explain why the understanding of time value of money calculations is important in areas of accounting, management, marketing, and operations. Provide relevant examples to support your explanation.

Question (b) Peter has $10,000 that he can deposit in any three savings accounts for a 3- year period. Bank A compounds interest on an annual basis, Bank B compounds interest twice each year, and Bank C compounds interest each quarter. All three banks have a stated annual interest rate of 4%. What amount would Peter have at the end of the third year, leaving all interest paid on deposit, in each bank? On the basis of your findings, which bank should Peter choose? Why?

Reference no: EM133347060

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