Question 601571: $9,000 is invested in each of two accounts, both paying 8% annual interest. In the first account, interest compounds quarterly, and in the second account, interest compounds daily. Find the difference between the accounts after 18 years. (Give your answer correct to the nearest cent.)
Answer by lwsshak3(11628)   (Show Source):
You can put this solution on YOUR website! $9,000 is invested in each of two accounts, both paying 8% annual interest. In the first account, interest compounds quarterly, and in the second account, interest compounds daily. Find the difference between the accounts after 18 years. (Give your answer correct to the nearest cent.)
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Compound interest formula: A=P(1+r)^n, p=initial investment, r=interest rate per period, n=number of periods, A=amount after n periods.
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Interest compounded quarterly:
A=9000(1+(.08/4))^(4*18)
=9000(1+.02)^72
=9000(1.02)^72
=$37,450.26
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Interest compounded daily:
A=9000(1+(.08/365))^(365*18)
=9000(1+.000219)^6570
=9000(1.000219)^6570
=$37,935.87
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37935.87-37450.26=$485.61=Difference between accounts
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