Anne is comparing savings accounts. one account has an interest rate of 1.2 percent compounded yearly, and one account has an interest rate of 1.2 percent compounded monthly. which account will earn more money in interest?
1)the account that earns 1.2 percent compounded yearly
2)the account that earns 1.2 percent compounded monthly

2)the account that earns 1.2 percent compounded monthly

Explanation:

Compounded means that it is when the interests will be added to the main account as payment, in this case the cmpounded annualy just gives you 1.2% of the mean balance of the account for the year, while the compounded monthly gives you the same 1.2% of the mean balance of the account but once a year, so it grows 12 times a year, rather than just one, that´s why the account that is compounded monthly will give her more money than the one that is compounded annually.

contributions made after 1986. after-tax contributions to employer plans made after 1986 are recovered pro rata with taxable amounts. the remaining $80,000 is from pre-tax contributions, employer matching dollars, and earnings on those amounts.

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