Question

Gail has $7,500 that she wants to put in a new savings account. She is

considering two banks that are very similar. One difference she notices
are the interest rates:
Neighborhood Bank - 1.5% interest, compounded annually
Beautiful Day Bank - 1.5% interest, compounded daily
.
Based on interest, which bank would you suggest Gail pick if she plans to
have her money in the account for 20 years and why?

Answer 1

Easy answer, Neighborhood Bank. But to see how:

$7,500 * 0.015 (1.5%) = $112.50

$112.50 a day times 360 days = $40,500

$40,500 times 20 = $810,000.

$810k times 20 = $16,200,000. (16.2mil)

$112.50 times 20 = $2,250.

So..