Question

Rosa invests $3100 in an account with an APR of 2% and arvual compounding Julian invests $2600 in an account with an APR of 3% and annual compounding. Compute the balance in each account after 5 and 20 years

Answer 1

After 5 years, Rosa will have $3421.01 in her account and Julian will have $3009.97. After 20 years, Rosa will have $4600.79 and Julian will have $4701.08 in their accounts.

Step-by-step explanation:

Rosa's account:

After 5 years:

Balance = Principal * (1 + Rate of Interest/Compounding Frequency)^(Number of Compounding Periods)

= $3100 * (1 + 0.02/1)^(1 * 5)

= $3100 * (1.02)^5

= $3100 * 1.1041

= $3421.01

After 20 years:

Balance = $3100 * (1 + 0.02/1)^(1 * 20)

= $3100 * (1.02)^20

= $3100 * 1.4859

= $4600.79

Julian's account:

After 5 years:

Balance = Principal * (1 + Rate of Interest/Compounding Frequency)^(Number of Compounding Periods)

= $2600 * (1 + 0.03/1)^(1 * 5)

= $2600 * (1.03)^5

= $2600 * 1.1593

= $3009.97

After 20 years:

Balance = $2600 * (1 + 0.03/1)^(1 * 20)

= $2600 * (1.03)^20

= $2600 * 1.8061

= $4701.08