What interest rate assumption has the bank

Reference no: EM13331561

Your father is 50years old now and his plan is to retire exactly at the age of 60. His goal is to create a fund that will allow him to receive Rs15,00,000 at the time of retirement so that he can start a smallbusiness. He has searched the market and is confused between the two options:

Option 1: To deposit Rs.9,000 after every 6months in banks A

Option 2: To deposit Rs.2,000 after every 4months in banks B

Both banks assume payments at the end of respective months. As abusiness graduate, you have been asked to help him out as:

What interest rate assumption has the Bank A used in itsoffer?

What interest rate assumption has the Bank B used in itsoffer?

Which option is favorable? Answer with solid reasons.

Reference no: EM13331561

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