Noah wants to buy a 5-year annuity. He has two options. which one should he use?
1. Option A pays $1000 at the end of each year, starting one year from now. it earns interest at 6.25% compounded annually.

2. Option B pays $500 at the end of every six months, starting six months from now. it earns interest at 6.25% compounded semi-annually.

which annuity should Noah choose?

Option B is the better option.

Step-by-step explanation:

The more often you compound your interest, the more money you will have. I'm assuming Noah wants to maximize his money :)

Think of it like this: Every time the payment is "compounded," it increases by whatever the interest rate is. The more times you multiply your initial capital by the interest, the more you will have. Ultimately, Noah will have a net gain if he chooses option B.

sorry can't

step-by-step explanation:

i googled though and something came up but it was in science langueage not common english sooo

all it means is function 3