Question 3 2 points Which of the following is 0.5 as a fraction in simplest form?
1 answer:
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<h2>Answer:</h2>
Account B will yield more.
<h2>Step-by-step explanation:</h2>Savings account A and savings account B both offer APRs of 5%
But savings account A compounds interest annually, while savings account B compounds interest monthly.
Lets check which account will yield more :
<h2>Account A.</h2>Lets take p = 10,000
r = 5% or 0.05
n = 1
t = 1
Compound interest formula is :
Substituting values in formula;
= $10500
<h2>Account B:</h2>Lets take p = 10,000
r = 5% or 0.05
n = 12
t = 1
Compound interest formula is :
Substituting values in formula;
= $10510
We can see that account B gives more yield as compared to account A. When an account is compounded monthly, we earn interest on interest. This is why we yield more.
Therefore, account B will yield more.