Concept explainers
To determine which bank between the given two pays more interest.
Answer to Problem 14P
Hence Bank B pays more interest per year.
Explanation of Solution
Given information:
Bank A offers 6% interest compounded monthly.
Bank B offerts 6.1% compounded quaterly.
Formula for amount compounded at rate
Hence at 6% amount becomes,
Formula for amount compounded at rate
Hence at 6.1% amount becomes,
We can observe that the interest in 1 year only is higher of that of bank B.
Hence Bank B pays more interest per year.
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