Question 324060: I have two questions:
1) $6,000 is invested in each of two accounts, both paying 7% annual interest. In the first account, interest compounds quarterly, and in the second account, interest compounds daily. Find the difference between the accounts after 21 years. (Give your answer correct to the nearest cent.)
2) An initial deposit of $25,000 grows at an annual rate of 9% for 15 years. Compare the final balances resulting from annual compounding and continuous compounding. (Give your answers correct to the nearest cent.)
a) with Annual Compounding
b) with continuous compounding
Can you please help me work through both of these?
Thank you,
jerry
jerry@san.rr.com
Answer by rfer(16322)   (Show Source):
You can put this solution on YOUR website! A=P(1+r/n)^nt
A=6000(1+0.07/4)^4*21
A=6000(1.0175)^84
A=6000*4.29429
A=25,765.72
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A=6000(1+0.07/365)^365*21
A=6000(1.000191781)^7665
A=6000*4.348628
A=26,091.77
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26091.77-25765.72=326.05 difference
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For number two A use
A=P(1+r)^15
For two B use
A=Pe^rt
A=P*2.7183^.09*15
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Good luck
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