Question

Suppose that you have ​$4,000 to invest. Which investment yields the greater return over a 10 year​ period: 8.03% compounded daily or ​8.1% compounded​ quarterly? Find the total amount of the investment after 10 years if ​$4,000 is invested at ​8.03% compounded daily.

Answer 1

A = 5000(1+.0743/365)365(10)
= 5000(1.000203562)3650 = $10,510.38

A = 5000(1+.075/4)4(10)
= 5000(1.01875)40 = $10,511.75

As you can see these are practically equal, but the 7.5% quarterly is more.