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3 years ago

If an investor has a choice of investing money at 6% compounded daily or 6.025% compounded quarterly which one is best

Business

1 answer:

Keith_Richards [23]3 years ago

6 0

General Rule: Daily compounding gives a higher yield

Compounding works like this:

6.025% per quarter

Quarter 1: $100 x 6.025% = $6.025

Quarter 2: $106.025 x 6.025% = $6.388

Quarter 3: $112.413 x 6.025% = $6.7729

Quarter 4: $119.186 x 6.025% = $7.4491

Etc…

6% per day

Day 1: $100 x 6% = $6

Day 2: $106 x 6% = $6.36

...

Day 365: $193.47 x 6% = $11.96

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Preferred stockholders hold a claim on assets that has priority over the claims of common stockholders but after that of bondholders.

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3 years ago

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Answer:

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Credit Inventory $770

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Oct. 18: Debit Inventory $170

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