64.8k views
5 votes
Caroline invested $80,000 in an account paying an interest rate of 8% compounded daily. Qasim invested $80,000 in an account paying an interest rate of 7¾% compounded quarterly. After 10 years, how much more money would Caroline have in her account than Qasim, to the nearest dollar? a. $24,738 b. $16,942 c. $32,615 d. $19,827

User Latinos
by
8.0k points

1 Answer

4 votes

Final answer:

After 10 years, Caroline would have approximately $13,822.72 more in her account than Qasim.

Step-by-step explanation:

To find out how much more money Caroline would have in her account than Qasim after 10 years, we need to calculate the final amounts in both accounts.

For Caroline's account:

Principal amount = $80,000

Interest rate = 8% compounded daily

Time = 10 years

The formula to calculate the future value of the investment is:

A = P(1 + r/n)nt

Where A is the future value, P is the principal amount, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

Using this formula, we can calculate the future value for Caroline's account:

A = 80000(1 + 0.08/365)365*10

A ≈ $202,695.77

For Qasim's account:

Principal amount = $80,000

Interest rate = 7¾% compounded quarterly

Time = 10 years

Using the same formula, we can calculate the future value for Qasim's account:

A = 80000(1 + 0.0775/4)4*10

A ≈ $188,873.05

To find out how much more money Caroline would have in her account than Qasim, we subtract the final amount in Qasim's account from the final amount in Caroline's account:

202,695.77 - 188,873.05 ≈ $13,822.72

Therefore, Caroline would have approximately $13,822.72 more in her account than Qasim after 10 years.

User Aberna
by
9.2k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories