SOLUTION: Please help solve the problem. Which of the two rates would yield the larger amount in 1 year: 9 1/4% compounded monthly or 9% compounded annually?

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Question 617974: Please help solve the problem.
Which of the two rates would yield the larger amount in 1 year: 9 1/4% compounded monthly or 9% compounded annually?
Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website!
i'm not sure if you have the problem reversed or not.
9.25% compounded monthly would give you a future value of (1 + .0925/12)^12 * 1 which is equal to 1.096524148
9% compounded annually would give you a future value of (1 + .09/1)^1 * 1 which is equal to 1.09
clearly, 9.25% compounded quarterly is more.
in fact, 9.25% compounded annually is still more.
that's why i think you might have the problem reversed.
i'll make an assumed correction and see where that goes.
the corrected problem based on my assumption is:
9.0% compounded monthly versus 9.25% compounded annually for 1 year - which is more?
9.0% compounded monthly would give you a future value of (1 + .09/12)^12) which is equal to 1.093806898
9.25% compounded annually would give you a future value of (1 + .0925/1)^1 which is equal to 1.0925.
9.0% compounded quarterly gives you more than 9.25% compounded annually.