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11 January, 12:47

Suppose you invest $1,000 in each of two institutions for a full year. Both pay 5% interest, but the first compounds quarterly and the second compounds annually. What would be the difference in the interest gained between the two institutions?

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  1. 11 January, 13:02
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    The technical answer here would be the same since no time element was specified. However, the formula for one year annually would be $1,000 x 1.05^1 and quarterly would be $1,000 x (1 +.05/4) ^4 ...
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