Bank A offers an interest of 7 compounded daily while bank B

\"Bank A offers an interest of 7% compounded daily, while bank B offers continuous compounding at 6.87% APR. If you deposit $5,330 with each bank, what will be the difference in the two bank account balances after 2 years? Enter your answer as a positive number.\"

Solution

now here we first have to calculate the future value of investment and then compare

case 1

835(1+0.02/365)^365*5 = 923 approx

case 2

835(e)^1.24*5 = 888.40 approx

so we can see that case 1 is better in which we have compounded every day