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How much difference do you think it makes for your bank account whether there is continuous compounding of interest or only monthly or annual compounding?
Wiki User
∙ 14y ago
Banks that offer more frequent compounding usually lower the rate so that the annual equivalent rate remains the same. So the probable answer is no difference at all. Also, for the amount of money most people have in their bank accounts, the difference would, at best, be negligible. It would, quite likely, be less than the value that they attach to the time required to calculate the difference.
Wiki User
∙ 14y ago
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How much interest will be earned in an account into which 1000 is deposited for one year with continuous compounding at a 13 percent rate?
The "13 percent rate" is the equivalent annual rate. So the interest will be 130.
The accumulation of funds over time where previous interest earned remains in the account to earn additional interest is called?
compounding interest.... i think
What type of interest is interest paid on the amount of your original deposit plus on any interest that you have earned previously on the money in an account?
it is any interest after the first compounding there isn't a special name for it...
How much would Kendra have in her account after three years if she started with 500 and earned 2 percent interest compounding annually?
$530.60
What is the answer of the balance in the compound interest account 1400 after 3 years at 5.5 percent?
The question doesn't tell us the compounding interval ... i.e., how often theinterest is compounded. It does make a difference. Shorter intervals makethe account balance grow faster.We must assume that the interest is compounded annually ... once a year,at the end of the year.1,400 x (1.055)3 = 1,643.94 (rounded)at the end of the 3rd year.
What is the terminology of compounding interest?
The terminology of compounding interest means adding interest to the interest that one already has on an account. The interest could be added to a bank account or to a loan.
How much interest will be earned in an account into which 1000 is deposited for one year with continuous compounding at a 13 percent rate?
The "13 percent rate" is the equivalent annual rate. So the interest will be 130.
What is the interest on 1200 invested for 2 years in an account that earns 5 percent interest per year?
The answer, assuming compounding once per year and using generic monetary units (MUs), is MU123. In the first year, MU1,200 earning 5% generates MU60 of interest. The MU60 earned the first year is added to the original MU1,200, allowing us to earn interest on MU1,260 in the second year. MU1,260 earning 5% generates MU63. So, MU60 + MU63 is equal to MU123. The answers will be different assuming different compounding periods as follows: Compounding Period Two Years of Interest No compounding MU120.00 Yearly compounding MU123.00 Six-month compounding MU124.58 Quarterly compounding MU125.38 Monthly compounding MU125.93 Daily compounding MU126.20 Continuous compounding MU126.21
The accumulation of funds over time where previous interest earned remains in the account to earn additional interest is called?
compounding interest.... i think
What is the Difference between nominal and effective interest rate?
Nominal interest rate is also defined as a stated interest rate. This interest works according to the simple interest and does not take into account the compounding periods. Effective interest rate is the one which caters the compounding periods during a payment plan. It is used to compare the annual interest between loans with different compounding periods like week, month, year etc. In general stated or nominal interest rate is less than the effective one. And the later depicts the true picture of financial payments.
You deposit 265 in a bank account that offers 5 annual compounding interest. At the end of five years your total earnings in interest are?
$73.21
What type of interest is interest paid on the amount of your original deposit plus on any interest that you have earned previously on the money in an account?
it is any interest after the first compounding there isn't a special name for it...
Difference between compounded daily or monthly?
Compounded daily means interest is calculated and added to the account balance every day, resulting in slightly higher overall returns compared to compounding monthly, where interest is calculated once at the end of each month. This difference is due to the more frequent compounding events in daily compounding.
What are real world applications of integrals?
Most likely, you will not be doing integrals as part of your daily life, but knowing how integrals work, can help you understand how some things work. Foir example, the interest earned on an interest bearing account (like a savings account) when compounded daily, is close to the value for 'continuous compounding'. The rate curve represents the interest earned at a particular time, and the area under the curve (the integral of the function) represents the total accumulated interest.
How much would Kendra have in her account after three years if she started with 500 and earned 2 percent interest compounding annually?
$530.60
You deposit 250 in a bank account that offers compound interest at a rate of 5 compounding quarterly. At the end of five years your balance is?
320.51 A+
Compound Interest and Your Return?
Compound Interest and Your Return How interest is calculated can greatly affect your savings. The more often interest is compounded, or added to your account, the more you earn. This calculator demonstrates how compounding can affect your savings, and how interest on your interest really adds up!
