Step 1 : Introduction to the question "Anthony is deciding between different savings accounts at his bank. He has four options, based on how frequently interest compounds. Which should he choose if he wants the best rate of return on his interest? "
...A.) Monthly Compounding B.) Daily Compounding* C.) Annual Compounding D.) Semi-Annual Compounding - Compounding is the process of charging interest on the interest generated on an account. If interest is compounded daily that means that the calculation occurs each day of the year (365 days). If interest is compounded yearly, then n = 1; if semi-annually, then n = 2; quarterly, then n = 4; monthly, then n = 12; weekly, then n = 52; daily, then n = 365; and so forth, regardless of the number of years involved.
