Stan has $11,050 to invest in a savings account for one year. His bank offers him two choices:
Account 1: r = 3% compounding annually.
Account 2: r = 3% compounding monthly.
Which account should Stan invest in?

Account 1 ?
or
Account 2 ?

Question

Stan has $11,050 to invest in a savings account for one year. His bank offers him two choices: 
Account 1: r = 3% compounding annually. 
Account 2: r = 3% compounding monthly. 
Which account should Stan invest in? 

 Account 1 ?
or
 Account 2 ?

anonymous · Answer

Monthly because he would gain the interest at the end of the month, then make interest on the interest he has earned the second month.

mathstudent55 · Answer

The more often you compound interest, the more interest you earn on interest and the faster the account grows.

anonymous · Answer

ok so account 2?

mathstudent55 · Answer

Yes.

anonymous · Answer

cool thanks

mathstudent55 · Answer

@alyygirl 
Do you understand the concept of compound interest?

anonymous · Answer

y ea i did! 

Joe deposits $630 in a savings account which pays 5.5% per year. If the account compounds monthly, find how long it takes to double his investment.