Question

When investing money in a bank account, in which situation will you have the most money in your account at the end of five years ?

Answer 1

Compounded weekly

Explanation:

Because the more times the money is compounded, the more money you will have in the end. simple as that

Answer 2

The answer is weekly

Explanation:

Lets take a quick look at the formula:

`A= P(1+(r)/(n) )^(nt)`

A = the future value of the investment/loan, including interest

P = the principal investment amount (the initial deposit or loan amount)

r = the annual interest rate (decimal)

n = the number of times that interest is compounded per unit t

t = the time the money is invested or borrowed for

Notice that n is an exponent where the greater the n the greater the value. The greatest value of n is when it is inserted weekly which gives n = 52. In 5 years, t will always be constant. Therefore, the greater the number of n, the greater the money earned.

Hope this helps.