Question

Jamar invested $3,700 in an account paying an interest rate of 3, start fraction, 3, divided by, 8, end fraction3 8 3 ​ % compounded continuously. Jordan invested $3,700 in an account paying an interest rate of 3, start fraction, 3, divided by, 4, end fraction3 4 3 ​ % compounded quarterly. After 20 years, how much more money would Jordan have in his account than Jamar, to the nearest dollar?

Answer 1

To find out the difference in their accounts after 20 years, we calculate the future value of their investments using compound interest.

Step-by-step explanation:

To find out how much more money Jordan would have in his account than Jamar after 20 years, we need to calculate the future value of their investments using compound interest.

For Jamar's account, we use the formula A = P * e^(rt), where A is the future value, P is the principal amount, r is the interest rate, and t is the time in years. Plugging in the values, A = 3700 * e^(0.03 * 20).

For Jordan's account, we use the formula A = P * (1 + r/n)^(nt), where n is the number of times interest is compounded per year. Plugging in the values, A = 3700 * (1 + 0.0375/4)^(4 * 20).

Finally, we subtract Jamar's future value from Jordan's future value to find the difference.

The difference is approximately $536.30.