You received a federal tax refund of $2,500 this year. You want to put it in a savings account with the hopes of earning interest. The bank gives you two options:

1. You can deposit the money in an account with a simple interest rate of 5%
2. You can deposit the money in an account that is compounded monthly at an interest rate of 4.5%.

Which option would you choose if you were planning on saving for 2 years?

What if you chose to leave the money in the account for 7 years? Which account type would be more beneficial?

For this discussion:

1. All work must be shown with your explanations. In other words, formulas from chapter 11 should be used and shown in your discussion board.  Just an explanation will NOT give you credit.