1. **State the problem:** We want to compare two investments: one with 9.8% interest compounded daily, and another with 11% interest compounded monthly, to determine which yields a better return. 2. **Formula for compound interest:** The effective annual rate (EAR) is given by $$EAR = \left(1 + \frac{r}{n}\right)^n - 1$$ where $r$ is the nominal annual interest rate (as a decimal), and $n$ is the number of compounding periods per year. 3. **Calculate EAR for 9.8% compounded daily:** - $r = 0.098$ - $n = 365$ $$EAR = \left(1 + \frac{0.098}{365}\right)^{365} - 1$$ 4. **Calculate EAR for 11% compounded monthly:** - $r = 0.11$ - $n = 12$ $$EAR = \left(1 + \frac{0.11}{12}\right)^{12} - 1$$ 5. **Evaluate EAR for 9.8% daily:** $$EAR = \left(1 + 0.00026849\right)^{365} - 1$$ Using approximation or calculator, $$EAR \approx 1.1031 - 1 = 0.1031 = 10.31\%$$ 6. **Evaluate EAR for 11% monthly:** $$EAR = \left(1 + 0.0091667\right)^{12} - 1$$ Using approximation or calculator, $$EAR \approx 1.1166 - 1 = 0.1166 = 11.66\%$$ 7. **Conclusion:** The 11% compounded monthly investment yields an effective annual rate of approximately 11.66%, which is higher than the 10.31% from 9.8% compounded daily. Therefore, the 11% compounded monthly investment is better.