Asked by Beth
May Wattson has 50000 to invest in a 4-year certificate of deposit that earns an interest rate of 3.75% compounded monthly or 3.50% compounded daily. Based on annual yield which is the better investment?
Answers
Reiny
3.75% compounded monthly:
let the annual rate be i
1+i = (1 + .0375/12)^12
1+i = 1.038151..
i = .038151 = 3.8151 %
follow the same steps I showed you in your previous post for the daily compounding question.
Then compare the annual rates
let the annual rate be i
1+i = (1 + .0375/12)^12
1+i = 1.038151..
i = .038151 = 3.8151 %
follow the same steps I showed you in your previous post for the daily compounding question.
Then compare the annual rates