SOLUTION: Hello, I am having trouble with the following question: Suppose you have $1,000 to invest. You can either invest in a CD that yields an 8% simple interest, or in a CD that yi

Question 1135557: Hello,
I am having trouble with the following question:
Suppose you have $1,000 to invest. You can either invest in a CD that yields an 8% simple interest, or in a CD that yields a 6% interest if compounded quarterly. Which investment will yield a greater return at the end of one year. Show work to prove your answer.
I believe it would be 6% compounded but I'm not sure how to prove it.
Thank you so much in advance!
Answer by josmiceli(19441) (Show Source): You can put this solution on YOUR website!
For simple interest:

$1,080
--------------------------------
For compound interest:

(compounded quarterly )

$1,061.36
The simple interest gives more return

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