<PRE><B>Question 396377</B>
Jeanne Marie said there is no difference between an 8% annual interest rate compounded quarterly and an 8% annual interest rate.
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Explain to Jeanne Marie the error of her ways using examples and a clear explanation
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Growth in value in 10 years of $1 if invested at 8% compounded quarterly

A(1) = 1(1+(0.08/4))^(4*10)
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= (1+0.02)^40
= $2.2080..


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Growth in value in 10 years of $1 if invested at 8% annual rate
= 1 + 0.08*10
= $1.80
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Cheers,
Stan H. 
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