Question

ian invested $100 in an account paying an interest rate of 9 1/4% compound daily. Addison invested $100 in an account paying an interest rate of 9 3/8% compounded monthly. After 13 years, how much money would addison have in her account than Ian, to the nearest dollar?

Answer 1

$5.67, or $6 rounded to the nearest dollar.

Explanation:

To determine the amount that both Ian and Addison will have in their respective accounts after 13 years, knowing that they both invested $ 100 in accounts with daily compound interest, but Ian did it in one with an interest of 9.25% while Addison did it in one with a interest of 9.375%, the following calculations must be made:

Ian = 100 x (1 + 0.00925 / 365) ^ 13x365

Ian = 332.79

Addison = 100 x (1 + 0.009375 / 365) ^ 13x365

Addison = 338.46

338.46 - 332.79 = 5.67

Therefore, Addison will have $ 5.67 more than Ian after the investment term.