Question

Jane bennett can invest $20000 at either 5.5% coumpounded monthly for 1 year (amount of $1 investment is 1.156408)
Or 6.25% compounded quarterly for 1 uear ( amount of $1 investment is 1.06398)
What is the effective annual yield of the better onvestment?

Answer 1

Compound Interest=
(1 + rate/n)^n
where n is the number of times it is compounded
for 5.5%
(1 + .055/12)^12 =
(1.0045833333)^12 =
1.0564078604 per year

for 6.25% compounded quarterly
(1 + .0625/4)^4 =
(1.015625)^4 =
1.0639801621 per year

Which is better?

Answer 2

1.0639801621

Answer 3

Nvm
I figured it out
It was 6.398%