Final answer:
The monthly compounding option at 3.75% is the better deal.
Step-by-step explanation:
To determine which 5-year investment is the best deal, we need to compare the compound interest earned on both options. For the daily compounding at 3.5%, the formula is A = P(1 + r/n)^(nt). Plugging in the values, we get A = 20000(1 + 0.035/365)^(365*5) = $24,397.36. For the monthly compounding at 3.75%, the formula is A = P(1 + r/n)^(nt). Plugging in the values, we get A = 20000(1 + 0.0375/12)^(12*5) = $24,579.26. Therefore, the monthly compounding option at 3.75% gives a higher return, making it the better deal.