Question

Dylan invested $700 in an account paying in interest rate of 1 3/4% compounded quarterly. Sebastian invested $700 in an account paying in interest rate of 1 1/4% compounded daily. After 12 years how much more money would Dylan have in his account than Sebastian

Answer 1

Answer: $57.25

Explanation:

Answer 2

After 12 years, the amount of money Dylan would have in his account more than Sebastian is $49.90.

How much more money would Dylan have in his account than Sebastian?

Dylan:

Principal, P = $700

Interest rate, r = 1¾% = 1.75% = 0.0175

Number of periods, n = 4

Time, t = 12 years

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

`{A = 700.00(1 + (0.0175)/(4) )}^(4 * 12)`

A = 700.00(1 + 0.004375)⁴⁸

A = 700.00(1.004375)⁴⁸

A = $863.18

Sebastian:

Principal, P = $700

Interest rate, r = 1¼% = 1.25% = 0.0125

Number of periods, n = 365

Time, t = 12 years

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

`{A = 700.00(1 + (0.0125)/(365) )}^(365 * 12)`

A = 700.00(1 + 3.4246575342466E-5)⁴³⁸⁰

A = 700.00(1.0000342465753)⁴³⁸⁰

A = $813.28

Therefore,

Difference between Dylan and Sebastian balance = $863.18 - $813.28

= $49.90