document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1191432>Question 1191432</A>: <I><SPAN STYLE=\"word-break: break-all;\"> One bank quotes interest at 4% p.a. compounded semi annually. Another bank offers interest of 5% compounded monthly. Which one of these banks would you prefer and why? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #823292 by </B><A HREF=/tutors/aboutme.mpl?userid=math_tutor2020><B>math_tutor2020(3817)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=math_tutor2020><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=823292\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> <font color=black size=3><BR>\n" );
document.write( "The compound interest formula is<BR>\n" );
document.write( "A = P*(1+r/n)^(n*t)\r<BR>\n" );
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document.write( "Let's say we have P = 100 dollars to deposit and we do so over t = 1 year.\r<BR>\n" );
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document.write( "The first scenario has r = 0.04 and n = 2<BR>\n" );
document.write( "A = P*(1+r/n)^(n*t)<BR>\n" );
document.write( "A = 100*(1+0.04/2)^(2*1)<BR>\n" );
document.write( "A = 104.04\r<BR>\n" );
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document.write( "The second scenario involves r = 0.05 and r = 12<BR>\n" );
document.write( "A = P*(1+r/n)^(n*t)<BR>\n" );
document.write( "A = 100*(1+0.05/12)^(12*1)<BR>\n" );
document.write( "A = 105.116189788173<BR>\n" );
document.write( "A = 105.12\r<BR>\n" );
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document.write( "The second scenario is better.<BR>\n" );
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