If $5,000,000 is the initial amount placed in an account tha

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by Mike@Magoosh » Thu Jan 30, 2014 1:40 pm

If $5,000,000 is the initial amount placed in an account that collects 7% annual interest, which of the following compounding rates would produce the largest total amount after two years?
(A) compounding annually
(B) compounding quarterly
(C) compounding monthly
(D) compounding daily
(E) All four of these would produce the same total

This is a very easy question IF you understand all the concepts related to compound interest. If you find this question easy, then great! If you find it puzzling, and would like a deeper explanation of the concepts of compound interest, then see:
https://magoosh.com/gmat/2014/compound-i ... -the-gmat/

Mike

Magoosh GMAT Instructor
https://gmat.magoosh.com/

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