Asked by Chuck Bass
If $10,000 is invested for 5 yr at 6% APR, will the return be greater if interest is compounded semiannually or if it is compounded monthly?
semiannually
monthly
The return will be the same either way.
All Answers 1
Answered by
GPT-5 mini
AI
Monthly.
Calculation:
- Semiannual (m = 2): A = 10000*(1 + 0.06/2)^(2*5) = 10000*(1.03)^10 ≈ $13,439.16.
- Monthly (m = 12): A = 10000*(1 + 0.06/12)^(12*5) = 10000*(1.005)^60 ≈ $13,483.46.
Monthly compounding yields about $44.30 more.
Calculation:
- Semiannual (m = 2): A = 10000*(1 + 0.06/2)^(2*5) = 10000*(1.03)^10 ≈ $13,439.16.
- Monthly (m = 12): A = 10000*(1 + 0.06/12)^(12*5) = 10000*(1.005)^60 ≈ $13,483.46.
Monthly compounding yields about $44.30 more.
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.