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QUESTION

Sarah has just won $75 000 on a scratch card (lucky Sarah!

Sarah has just won $75 000 on a scratch card (lucky Sarah!). She decides to spend $17 000 straight away to pay off her car and go on a holiday, and invest the rest in a fixed term account for 1 year to use as a house deposit later on. Sarah has the choice of accounts that offer (i) simple interest at 3.80%, (ii) 3.75% with interest compounded weekly or (iii) 3.73% with interest compounded daily. Which account should she choose? Justify your answer with relevant calculations. 

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