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It all depends with the amount of the annual or daily compounding. In most cases it is however the daily compounding that pays more than the annual compounding.

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Q: Does annual compounding pay more money than daily compounding?
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Related questions

Does annual compound pay more money than daily compound?

It all depends with the amount of the annual or daily compounding. In most cases it is however the daily compounding that pays more than the annual compounding.


What is the difference between effective interest method and constant yield method?

An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: Consider a stated annual rate of 10%. Compounded yearly, this rate will turn $1000 into $1100. However, if compounding occurs monthly, $1000 would grow to $1104.70 by the end of the year, rendering an effective annual interest rate of 10.47%. Basically the effective annual rate is the annual rate of interest that accounts for the effect of compounding.


How much difference do you think it makes for your bank account whether there is continuous compounding of interest or only monthly or annual compounding?

Banks that offer more frequent compounding usually lower the rate so that the annual equivalent rate remains the same. So the probable answer is no difference at all. Also, for the amount of money most people have in their bank accounts, the difference would, at best, be negligible. It would, quite likely, be less than the value that they attach to the time required to calculate the difference.


What type of compounding would you prefer in your savings account?

The more often it is compounded the better. So daily is the best, next is weekly, monthly etc. The greater the number of compounding periods, the better it is for your bottom line.


What is the relationship between discounting and compounding?

The only relationship between these two things is that it gives a consumer more product for less money. Discounting is taking an amount of money off a product and compounding is giving more than 1 product at the same price as 1.


What would be the value of one hundred dollars with a five percent compound interest after two years?

That depends on how often it is compounded. For annual compounding, you have $100 * (1 + 5%)2 = $100 * (1.05)2 = $100*1.1025 = $110.25This works because at the end of the first compounding period (year), you've earned interest on the amount at the beginning of the compounding period. At the end of the first year, you have $105.00, and the same at the beginning of the second year. At the end of the second compounding period, you have earned 5%interest on the $105.00 so it is $105 * (1.05) = $100*(1.05)*(1.05) or $100 * 1.052.Compounding more often, will yield a higher number, but not much over a 2 year period. Compounding continuously, for example is $100 * e(2*.05) = $100 * e(.1)= $100 * e(.1) = $100 * 1.10517 = $110.52 (27 cents more).Compounding daily will be close to the continuous function, and compounding monthly or quarterly will be between $110.25 and $110.52


Does annual compound pay more than daily compound?

sometimes or in some cases. and it depends.


What does effective interest rate mean?

An effective annual interest rate considers compounding. When the principle is compounded multiple times each year the interest rate increased to be more than the stated interest rate. The increased interest rate is the effective annual interest rate.


Annual earnings for a pro athlete?

The annual earnings for a pro athlete depend on the sport and the level of skill. More skill players earn more money.


What the example of compounding combining two-more words?

yes


Does compounding quarterly earn you more than compounding monthly?

Monthly compounding earns more then quarterly. For example if your told your account earns 6% compounded monthly, then after 12 months you should earn 6.17% . If your account compounds quarterly, then after four quarters you should earn 6.14% .


What is better for the consumer simple interest or compounded daily?

I'm thinking of bonds when answering this question. The more frequent the compounding the better it will be for the lender. The less frequent the compounding the better it will be for the borrower. Lets use this example: Interest = 10% Principle = $1000 Compounding A = Annually Compounding B = Quarterly Time period = 2 years A) At the end of the first year $100 in interest would have been made making the balance $1100. At the end of the second year $110 would be earned because of compounding and the balance would be $1210. B) At the end of the first year $103.81 in interest would have been earned with a ending balance of $1103.81. At the end of the second year the interest earned would be $114.59 and the ending balance would be $1218.40. What I showed here is that if you are the one receiving the interest you would prefer daily compounding. When you're paying out interest you would prefer simple interest.