Question

The same amount of principal is invested in different accounts earning the same interest rate. Which of the following

accounts would have the greatest accumulated value at the end of one year?
a. An account earning no interest
b. An account earning simple interest
C. An account earning interest compounded annually
d. An account earning interest compounded daily
Please select the best answer from the choices provided
O A
OB
OC
COD

Answer 1

d)

Explanation:

no interest means the principal would remain unchanged

simple interest means the principal would be increased at the end of the year by whatever the percentage rate is

the principal that is compounded annually is the same as simple interest with a term of one year

the principal that is compounded daily would have the greatest value because you principal is earning interest each day which in essence is earning 'interest on interest'