SOLUTION: Topic: Financial Mathematics Is it A? I want to check my answer. Which account has the highest annual interest rate? A. Account 1: Interest is compounded daily at a rate

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Question 1179869: Topic: Financial Mathematics
Is it A? I want to check my answer.
Which account has the highest annual interest rate?
A. Account 1: Interest is compounded daily at a rate of 5.25%.
B. Account 2: Interest is compounded monthly at a rate of 5.40%.
C. Account 3: Interest is compounded quarterly at a rate of 5.50%.
D. Account 4: Interest is compounded annually at a rate of 5.55%.

The answer is provided in the link here: https://i.imgur.com/QSbXPpc.png
Found 2 solutions by MathLover1, ikleyn:
Answer by MathLover1(20850) About Me  (Show Source):
You can put this solution on YOUR website!

A. Account 1: Interest is compounded daily at a rate of 5.25%.

%28%28%28%280.0525+%2F+100%29+%2B+1%29+%5E+365%29+-+1%29%2A100=21.12%


B. Account 2: Interest is compounded monthly at a rate of 5.40%.
%28%28%28%280.0540+%2F+100%29+%2B+1%29+%5E+365%29+-+1%29%2A100=21.78%


C. Account 3: Interest is compounded quarterly at a rate of 5.50%.
%28%28%28%280.0550+%2F+100%29+%2B+1%29+%5E+365%29+-+1%29%2A100=22.23%

D. Account 4: Interest is compounded annually at a rate of 5.55%.
%28%28%28%280.0555+%2F+100%29+%2B+1%29+%5E+365%29+-+1%29%2A100=22.45%

Which account has the highest annual interest rate?
answer: D


Answer by ikleyn(52873) About Me  (Show Source):
You can put this solution on YOUR website!
.
Topic: Financial Mathematics
Is it A? I want to check my answer.
Which account has the highest annual interest rate?
A. Account 1: Interest is compounded daily at a rate of 5.25%.
B. Account 2: Interest is compounded monthly at a rate of 5.40%.
C. Account 3: Interest is compounded quarterly at a rate of 5.50%.
D. Account 4: Interest is compounded annually at a rate of 5.55%.
The answer is provided in the link here: https://i.imgur.com/QSbXPpc.png
~~~~~~~~~~~~~


            All calculations in the post by  @MathLover1 are  INCORRECT,
            showing that the lady  DOES  NOT  KNOW  the subject,  AT  ALL.

            All her formulas are  INVALID  and  IRRELEVANT.

            I came to bring the correct solution/calculations. 


The annual interest rate is calculated and presented in the Table below


(A)  daily compounded at 5.25%    %281%2B0.0525%2F365%29%5E365-1 = 1.05390 - 1 = 0.05390 = 5.390%.


(B)  monthly compounded at 5.40%    %281%2B0.0540%2F12%29%5E12-1 = 1.05536 - 1 = 0.05536 = 5.536%.


(C)  quarterly compounded at 5.50%    %281%2B0.0550%2F4%29%5E4-1 = 1.05614 - 1 = 0.05614 = 5.614%.


(D)  annually compounded at 5.55%    %281%2B0.0555%29-1 = 1.0555 - 1 = 0.0555 = 5.550%.


The maximum annual interest rate is the option (C)


The answer in your post (option A)  is INCORRECT.

Solved,  calculated,  answered,  explained and completed.

For your safety,  ignore the post by  @MathLover1.

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To learn the subject,  see the lessons
    - Compounded interest percentage problems
    - Problems on discretely compound accounts
in this site.


After reading these lessons,  you will tackle such problems on your own without asking for help from outside.

Also,  you have this free of charge online textbook in  ALGEBRA-I in this site
    - ALGEBRA-I - YOUR ONLINE TEXTBOOK.

The referred lessons are the part of this online textbook under the topic  "Logarithms".


Save the link to this online textbook together with its description

Free of charge online textbook in ALGEBRA-I
https://www.algebra.com/algebra/homework/quadratic/lessons/ALGEBRA-I-YOUR-ONLINE-TEXTBOOK.lesson

to your archive and use it when it is needed.


Happy learning (!)


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