Claudia is considering opening a savings account. Two banks offered her the same interest but with different compounding rates. Fidelity Bank is offering to pay 6% interest compounded daily while Ecobank is offering the same rate compounded semiannually. Which account will pay more to her if she leaves a GHS1,000 deposit for one year?
Fidelity Bank:
"FV = 1,000\u00d7(1 + 0.06\/365)^{365} = 1,061.83."
Ecobank:
"FV = 1,000\u00d7(1 + 0.06\/2)^2 = 1,060.9."
So, Fidelity bank will pay more.
Comments
Thank you! I got the same answer.
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