Ask Question
23 October, 16:24

The same amount of principal is invested in different accounts earning the same interest rate. Which of the following accounts would have the greatest accumulated value at the end of one year?

a. An account earning no interest

b. An account earning simple interest

c. An account earning interest compounded annually

d. An account earning interest compounded daily

+2
Answers (1)
  1. 23 October, 19:54
    0
    D.) An account earning interest compounded daily.

    This is the account that would have the greatest accumulated value at the end of one year.

    Let us assume the following figures.

    Principal = 1,000

    Interest rate = 12% p. a.

    Term 1 year

    a) account earning no interest = 1,000

    b) account earning simple interest

    S. I. = 1,000 x 12% x 1 = 120

    Balance = 1000 + 120 = 1,120

    c) account earning interest compounded annually

    FV = 1,000 (1+.12) ¹

    FV = 1,000 (1.12)

    FV = 1,120

    d) account compounded daily

    FV = 1,000 (1 +.12/365) ³⁶⁵

    FV = 1,000 (1 + 0.00033) ³⁶⁵

    FV = 1,000 (1.00033) ³⁶⁵

    FV = 1,000 (1.128)

    FV = 1,128
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The same amount of principal is invested in different accounts earning the same interest rate. Which of the following accounts would have ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers