Question

Melanie invested $3,800 in an account paying an interest rate of 2 % compounded

quarterly. Sebastian invested $3,800 in an account paying an interest rate of 2%
compounded monthly. After 6 years, how much more money would Sebastian have in
his account than Melanie, to the nearest dollar?

Answer 1

To find the difference in the amounts of money Melanie and Sebastian would have after 6 years, we need to calculate the final amounts for each account using compound interest formula.

Step-by-step explanation:

To find the difference in the amounts of money Melanie and Sebastian would have after 6 years, we need to calculate the final amounts for each account. For Melanie's account, the interest is compounded quarterly, so we use the formula:

A = P(1 + r/n)^(nt)

where A is the final amount, P is the principal (initial investment), r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years.

For Sebastian's account, the interest is compounded monthly, so we use the same formula with the appropriate values.

Once we have the final amounts for both accounts, we can find the difference by subtracting Melanie's amount from Sebastian's amount.