posted by Kat on .
you are looking for a safe place to put 30,000.00 for one yr. Bank A offers 2.46% interest rate continuously. Bank B offers 2.48% quarterly and Bank C offers 2.47% monthly. Find the most effective rate of each to determine which would earn you the most interest at the end of one yr.
Bank A interest per years = (2.46*30000)/100= $738 per year
Bank B interest (2.48*30000)/100=744
Bank c interest (2.47*30000)/100=741
So Bank B the most interest at the end of one year.
John, please do not attempt to answer questions, if you have no idea how that question is done.
Bank A ---> 30000 e^(.0246) = $30,747.15
Bank B ---> 30000(1 + .0248/4)^4 = $30,750.95
Bank C ---> 30000(1+.0247/12)^12 = $30,749.45
Plan B is the best way, but not for the "reasons" John gave. He didn't even include the compounding factor.