Question 116886
I'LL LET YOU DECIDE WHICH IS THE BEST PLAN BY CALCULATING BOTH THE ANNUAL AND THE MONTHLY COMPOUNDING PLANS.
FIRST THE ANNUAL PLAN
A=P(1+R/N)^NT
A=4,000(1+.07)^8
A=4,000(1.07)^8
A=4,000*1.718186
A=6,872.74 ANSWER FOR ANNUAL COMPOUNDING.
MONTHLY COMPOUNDING WOULD BE:
A=4,000(1+.07/12)^12*8
A=4,000(1+.005833)^96
A=4,000(1.005833)^96
A=4,000*1.747771
A=6,991.08 ANSWER FOR MONTHLY COMPOUNDING.