SOLUTION: which of the two rates would yield the larger amount in 1 year: 9% compounded monthly or 9 and 1/4% compounded annually?

Algebra ->  Logarithm Solvers, Trainers and Word Problems -> SOLUTION: which of the two rates would yield the larger amount in 1 year: 9% compounded monthly or 9 and 1/4% compounded annually?      Log On


   

Question 933523: which of the two rates would yield the larger amount in 1 year: 9% compounded monthly or 9 and 1/4% compounded annually?
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
9.25% compounded annually is equal to 1.0925^1 = 1.0925

9% compounded monthly is equal to (1 + (.09/12))^12 = 1.0075^12 = 1.0938

9% compounded monthly gives you a greater return than 9.25% compounded annually.