Which account has the highest annual interest rate? a. account 1: interest is compounded annually at a rate of 3.28%. b. account 2: interest is compounded monthly at a rate of 3.25%. c. account 3: interest is compounded weekly at a rate of 3.10%. d. account 4: interest is compounded daily at a rate of 3.15%. e. account 5: interest is compounded quarterly at a rate of 3.25%.

The highest annual interest rate is B. Account 2: Interest is compounded monthly at a rate of 3.25%

Step-by-step explanation:

Let's recall that the compounded interest formula is:

FV = P * (1 + r/n)ⁿ

where FV is the Future Value, P is the principal or initial deposit, r is the interest rate and n the number of times interest is applied per time period.

Now, let's assume we deposit $ 100 in each account. These will be the balances after 12 months (rounded to the next cent):

Account 1 = 100 * (1 + 0.0328)¹ = 103.28Account 2 = 100 * [1 + (0.0325/12)]¹² = 103.30Account 3 = 100 *  [1 + (0.031/52)]⁵² = 103.15Account 4 = 100 * [1 + (0.0315/360)]³⁶⁰  = 103.20Account 5 = 100 *  [1 + (0.0325/4)]⁴= 103.29

The highest annual interest rate is B. Account 2: Interest is compounded monthly at a rate of 3.25%

The guy who above me is right