You have $10,000 to invest and want to keep your money invested for 10 years. You are considering the following investment options. Choose the investment option that will earn you the most money.

Compare the amounts after 10 years. For quarterly compounding, the amount is $10,000(1 + 0.02975/4)^(4×10), or about $13,460. The other options produce about $13,360 for monthly compounding, $13,430 for annual compounding, and $13,250 for simple interest. Therefore, 2.975% compounded quarterly earns the most.

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