Chapter Project Investigations which would produce a larger balance: an annual interest rate of 8.05% compounded monthly or an annual interest rate of 8% compounded continuously? Explain. 2. You deposit $1000 in each of two savings accounts. The interest for the accounts is paid according to the two options described in Question 1. How long would it take for the balance in one of the accounts to exceed the balance in the other account by $100? By 3. No income tax is due on the interest earned in some types of investments. You deposit $25,000 in an account. Which of the following plans is better? Explain. (a) Tax-ree The account pays 5% compounded annually. There is no income tax due on the earned interest (b) Tax-deferred The account pays 7% compounded annually. At maturity, the earned interest is taxable at a rate of 40%