Answer :
Tiffany's effective interest is compounded weekly is 0.1604% greater than the compounded semiannually.
Compound interest is when you earn interest on both the money you've saved and the interest you earn.
Given,
The interest rate i= 8.145%
Number of weeks in an year n= 52
We know,
Effective interest rate =[tex](1+\frac{i}{n})^{n}-1[/tex]
Substitute the values
[tex]R_{1}=(1+\frac{0.08145}{52})^{52}-1\\ R_{1}= 0.084789[/tex]
Case 2
Compounded semiannually
[tex]R_{2}=(1+\frac{0.08145}{2})^{2}-1\\ R_{2}=0.083108[/tex]
The difference is
[tex]R_{1}-R_{2}= 0.084789-0.083185[/tex]
=0.001604
=0.1604%
Hence, the Tiffany's effective interest is compounded weekly is 0.1604% greater than the compounded semiannually
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