Local banks are all offering 6 compounded monthly on five year Certificates of Deposit Hanover Bank has offered continuous compounding at the same rate on new CDs hoping to attract additional customers Sharon Shaker has just received a $50,000 royalty check for a romance novel she wrote last year S...

At another bank the value of Sharons 50000 after five years will be FV PV FVF kn k 6 1 ...

Local banks are all offering 6% compounded monthly on five year Certificates of Deposit. Hanover Bank has

Question:

Local banks are all offering 6% compounded monthly on five year Certificates of Deposit. Hanover Bank has offered continuous at the same rate on new CDs hoping to attract additional customers. Sharon Shaker has just received a $50,000 royalty check for a romance novel she wrote last year. She has no immediate need for the money and intends to deposit it for about 5 years at the best interest rate she can get. How much more interest will her deposit earn at Hanover than at another bank?
Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will...