Answer: it is 1.004 times better
Step-by-step explanation:
Let $p represent the Initial amount invested into the account. Assumimg p = $1000
Let t represent the number of years for which $p was invested. Assuming t = 3 years
r = rate of investment = 6% = 6/100 = 0.06
Let A represent the total amount in the account at the end of t years.
The formula for compound interest is
A = P(1+r/n)^nt
1) if the investment is compounded 6 times per year, then
n = 6
A = 1000(1+0.06/6)^6 × 3
A = 1000(1.01)^18
A = 1196.15
2) if the investment is compounded yearly, then
n = 1
A = 1000(1+0.06/1)^1 × 3
A = 1000(1.06)^3
A = $1191.016
Therefore,
1196.15/1191.016 = 1.004
The investment that is compounded 6 times per year is 1.004 times better that that compound yearly at the same rate and time
