# Question #7330e

##### 1 Answer

Mar 16, 2017

#### Answer:

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

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

#### Explanation:

**Yearly compounding:**

$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 = 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.