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Answer:
compounding 6 times per year earns $458.36 more interest over 20 years
Step-by-step explanation:
We can compute the value of the investment for the different compounding schemes. The applicable formula is ...
A = P(1 +r/n)^(nt)
where P is the principal, r is the annual rate, n is the number of interest periods per year, and t is the number of years.
<u>Compounded 6 times per year</u>:
A = $3000(1 +.07/6)^(6·20) ≈ $12,067.41
<u>Compounded 1 time per year</u>:
A = $3000(1.07)^20 ≈ $11,609.05
