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10 December, 07:35

Which is the better choice: $1000 deposited for a year: you must show your work below.

a. at a rate of 5.5% compounded monthly?

b. at a rate of 5.4% compounded daily?

c. at a rate 4.5% compounded continuously?

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  1. 10 December, 10:26
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    A. The multiplier is (1 +.055/12) ^12 ≈ 1.0564079

    b. The multiplier is (1 +.054/365) ^365 ≈ 1.0554804

    c. The multiplier is e^.045 ≈ 1.0460279

    The rate 5.5% compounded monthly is the better choice.
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