You have $2,500 to deposit into a savings account.The five banks in your area offer the following rates.In which bank should you deposit your savings?

Question

Quizplus · Accepted Answer

Bank B offers the highest annual percentage yield (APY) of 3.71% when compounded monthly. This means that your money will grow the most in Bank B compared to the other options. Although Bank A may offer a slightly higher interest rate, the fact that it compounds annually means that your money will not grow as much over the course of a year compared to Bank B's monthly compounding. Bank C and E offer slightly lower APYs, and Bank D's continuous compounding may seem attractive, but the difference in APY is negligible and not worth the potential complexity of continuous compounding. Therefore, Bank B is the best choice for maximizing your savings.

You Have $2,500 to Deposit into a Savings Account