Question

Sebastian is going to deposit $750 in an account that earns 6.8% interest

compounded annually. His wife Yolanda will deposit $625 in an account that earns
7.2% interest compounded annually. They plan to keep their money deposited for
7 years and make no additional deposits or withdrawals. Which account will have
more money and by how much?

Answer 1

To determine which account will have more money in 7 years, you can use the formula for compound interest.

Step-by-step explanation:

To determine which account will have more money in 7 years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, 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.

For Sebastian's account:

A = 750 imes (1 + 0.068/1)^(1 imes 7) = 750 imes (1 + 0.068)^7

For Yolanda's account:

A = 625 imes (1 + 0.072/1)^(1 imes 7) = 625 imes (1 + 0.072)^7

Calculate the value of each equation to determine which account will have more money and by how much.