Simplify:
1 answer:
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Answer:
Option D
Step-by-step explanation:
To calculate compound interest we will use the formula :
Where,
A = Amount on maturity
P = Principal amount = $3000
r = rate of interest = 8.4% = 0.084
n = number of compounding period = Monthly = 12
t = time = 1 year
Now put the values in the formula.
=
= 3000(1.007)¹²
= 3000 × 1.08731066
= 3261.93198 ≈ $3261.93
While the other bank compounds interest daily.
Therefore, n = 365
Now put the values in the formula with n = 365
= 3000 × 1.08761958
= 3262.85874 ≈ $3262.86
Difference in the ending balance = 3262.86 - 3261.93
= $0.93
The difference in the ending balances of both CDs after one year would be $0.93.