# Question 7330e

Mar 16, 2017

Yearly compounding at 8% interest after 10 years: $2158.92 Monthly compounding at 8% interest after 10 years:$2219.64

#### Explanation:

Yearly compounding:

$1000 * (1 + .08)^10 =$2158.92

$1000 = initial deposit 1 + .08 = 8% interest rate on that deposit. 10 = number of times the interest is compounded over 10 years Monthly Compounding: $1000 * (1 + .08/12 )^120 = $2219.64#$1000 = initial deposit
1 + .08/12 = 8% interest rate split over 12 months
120 = number of times interest is compounded over 10 years.

Before I made an error: instead of compounding the interest 120 times under monthly compounding, I compounded it 240 times. Error is corrected.