Answer to Question #182746 in Economics for Saiffuddin

Question

5. Ravi is trying to find out which investment is better. Investment option 1 states interest at 11.10% p.a. compounded quarterly. Investment option 2 states interest at 10.90% p a. compounded monthly. Which is the better investment choice?

Answer 1

$$(1+\frac{0.111}{12})^4=1.0373$$

$$(1+\frac{0.109}{12})^{12}=1.115$$

Need to choice second progect.