Question 68

Which of the following schemes of computing interest yields the maximum interest for a year?

Solution

For Option A, Compound Interest compound yearly = $$P(1+\dfrac{24}{100}) = P(\dfrac{124}{100})$$

For Option B, Compound Interest compounded monthly = $$P(1+\dfrac{2}{12})^{12}$$

For Option C, Compound Interest compounded quarterly = $$P(1+\dfrac{6}{4})^4$$

For Option D, Compound Interest compounded half yearly = $$P(1+\dfrac{12}{2})^2$$

Here, By looking at the powers, Compound Interest compounded monthly at 2% per month gives more interest than the other three.


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