Answer
$2
Work Step by Step
First the simple interest is computed by multiplying P, r and t together.
\[\begin{align}
& I=\frac{P\times r\times t}{100} \\
& =\frac{\$1,000\times7\times1}{100}\\&=\frac{\$7,000}{100}\\&=\$70\end{align}\]
By using the compounding daily method, the amount will be as follows:
\[\begin{align}
& A=P{{\left( 1+\frac{r}{n} \right)}^{n\times t}} \\
& =\$1,000{{\left(1+\frac{0.069}{360}\right)}^{360\times1}}\\&=\$1,000\times{{\left(1+0.000192\right)}^{360}}\\&=\$1,000\times1.071558\end{align}\]
\[=\$1,071.55\approx\$1,072\]
Compute the amount of interest by subtracting the principal from the amount.
\[\begin{align}
& \text{Interest}=\text{Amount}-\text{Principal} \\
& =\$1,072-\$1,000\\&=\$72\end{align}\]
The compounding technique where the interest rate is 5.9% the person will earn more interest.
\[\begin{align}
& \text{Difference}=\text{Interest}\,\text{earned}\,\text{in}\,\text{compounding}-\text{Interest}\,\text{earned}\,\text{in}\,\text{Simple}\,\text{method} \\
& =\$72-\$70\\&=\$2\end{align}\]
The value of the investment is more when compounding daily technique is used by \[\$2\]
