Future Value Problem

[mathinept]

A bank offers a 2-year certificate of deposit (CD) that pays 6% compounded quarterly. A competing bank in town also offers a 2 year CD that pays 6%, but the interest is componded daily. I

You have $125,000 to invest. How much more money will you get from the second bank after two years due to the daily compounding (assume exact time is used)?

I've started working on it with:

6%/4 = 1.5% rate per period; 2(4) = 8 periods
Or 6%/4 = 1.5% rate per period; 2(365) = 730 periods

I need a table value for both in order to multiply the $125K figure, but I'm not sure what tables to use?

Thanks for any help!

 

[Denis]

By "table value", I think you mean the future value of $1 ; which are:

6% quarterly: (1 + .06/4)^8

6% daily: (1 + .06/365)^730

 

[mathinept]

Thanks! Yes, that is what I needed.