Please answer and explain these questions 1. In which of the following scenarios
ID: 2818433 • Letter: P
Question
Please answer and explain these questions
1. In which of the following scenarios would you have the most money at the end of the year?
A. 2% compounded daily
B. 2% compounded monthly
C. 2% compounded yearly
D. 2% compounded weekly
2. Why do many people think it is be better to not receive a refund from the IRS at the end of the year?
A. because you are giving them money interest free instead of putting that money into an interest bearing account
B. because you should not expect the government to send you a check
C. because you never file taxes
D. because you put the Social Security number on your W-2 Form
Explanation / Answer
Lets assume the amount invested is $1000
A = P ( 1 + r/n) ^nt
A. 2% compounded daily
A = 1000 ( 1 + 0.02/365) ^ 365 x 1 = $1020.20
B. 2% compounded monthly
A = 1000 ( 1 + 0.02/12) ^ 12 x 1 = $1020.18
C. 2% compounded yearly
A = 1000 ( 1 + 0.02/1) ^ 1 x 1 = $1020
D. 2% compounded weekly
A = 1000 ( 1 + 0.02/52) ^ 52x 1 = $1020.19
All the iterations give almost the same amount