Free ACT Practice Question

Question 1 of 1
ID: ACT-M-85
Section: Math
Topics: Integrating Essential Skills; Interest & Compounding
Difficulty level: Challenging

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An investment pays at the rate of $6\tfrac{1}{4}\%$ on the annual basis. If the same investment pays at an annual interest rate of $6\%$ on a semi-annual basis without compounding, instead of $6\tfrac{1}{4}\%$ on a annual basis, what is the gain or the loss in payments as per the new terms at the end of the year to the investor who invests $20{,}000$ dollars?

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