SOLUTION: What is the difference between investing $4,000 for two years at 7% compound interest computed semi-annually or invest them at 5% computed compound interest quarterly basis?

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Question 1163100: What is the difference between investing $4,000 for two years at 7% compound interest computed semi-annually or invest them at 5% computed compound interest quarterly basis?
Found 2 solutions by ikleyn, Edwin McCravy:
Answer by ikleyn(52813) About Me  (Show Source):
You can put this solution on YOUR website!
.
What is the difference between investing $4,000 for two years at 7% compound interest computed semi-annually
or invest them highlight%28for_two_years%29 at 5% computed compound interest quarterly basis?
~~~~~~~~~~~~~~~ 


The difference is


    4000%2A%281%2B0.07%2F2%29%5E%282%2A2%29+-+4000%2A%281%2B0.05%2F4%29%5E%284%2A2%29 = 172.15  dollars.   ANSWER

The formulas are self-explanatory.

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On compounded interest problems,  see the lesson
    - Compounded interest percentage problems
in this site.


Answer by Edwin McCravy(20060) About Me  (Show Source):
You can put this solution on YOUR website!
What is the difference between investing $4,000 for two years at 7% compound
interest computed semi-annually or invest them at 5% computed compound
interest quarterly basis?
They always say, "Go by the higher interest rate, not the frequency of
compounding". Let's see if "they" are right:

A=P%281%2Br%2Fn%29%5E%28nt%29

A=4000%281%2B0.07%2F2%29%5E%282%2A2%29=%22%244590.09%22

A=4000%281%2B0.05%2F4%29%5E%284%2A2%29=+%22%244417.94%22

Looks like "they" are.

Edwin