Which Account Would Be Preferred by a Depositor: an 8

Which account would be preferred by a depositor: an 8 percent APR with monthly compounding or 8.5 percent APR with semi-annual compounding?

A) 8 percent with monthly compounding
B) 8.5 percent with semi-annual compounding
C) The depositor would be indifferent
D) The time period must be known to select the preferred account (1.0667) ¹²-1 = 8.3%
(1) 0425) ²-1 = 8.68%

Correct Answer:

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