Question

Which of the given interest rates and compounding periods would provide the best investment?

a) 2 & 1/2 % per year, compounded semiannually
b) 2 & 1/4 % per year. compounded monthly
c) 2% per year, compounded continuously

Answer 1

C

Answer 2

for how long?

Answer 3

?

Answer 4

The easiest way to figure this out is to make up an amount and length.

Say $1000 for 5 years.

So you plug in the given things into the formulas.

A)


B)


C)


Plug these into your calculator, whichever choice has the biggest number is the best investment.