Question

Ellie invested $13,000 in an account paying an interest rate of 8.25% compounded

continuously. Daniel invested $13,000 in an account paying an interest rate of 8.5%
compounded daily. After 18 years, how much more money would Daniel have in his
account than Ellie, to the nearest dollar?

Answer 1

Rate 1: 8

4

1

​

%=8+1/4=

 

 

8.25

%

→

0.0825

8.25%→0.0825

Rate 2:

8

1

2

%

=

8

+

1

/

2

=

Rate 2: 8

2

1

​

%=8+1/2=

 

 

8.5

%

→

0.085

8.5%→0.085

Calculate Final Amount for Ellie

Calculate Final Amount for Ellie

‾

Calculate Final Amount for Ellie

Compounded Continuously:

Compounded Continuously:

A

=

P

e

r

t

A=Pe

rt

P

=

13000

r

=

0.0825

t

=

18

P=13000r=0.0825t=18

Given values

A

=

13000

e

0.0825

(

18

)

A=13000e

0.0825(18)

Plug in

A

=

13000

e

1.485

A=13000e

1.485

Multiply

A

=

57394.5504

A=57394.5504

Use calculator (with e button)

Calculate Final Amount for Daniel

Calculate Final Amount for Daniel

‾

Calculate Final Amount for Daniel

Compounded Daily:

Compounded Daily:

A

=

P

(

1

+

r

n

)

n

t

A=P(1+

n

r

​

)

nt

Compound interest formula

P

=

13000

r

=

0.085

t

=

18

n

=

365

P=13000r=0.085t=18n=365

Given values

A

=

13000

(

1

+

0.085

365

)

365

(

18

)

A=13000(1+

365

0.085

​

)

365(18)

Plug in values

A

=

13000

(

1.0002329

)

6570

A=13000(1.0002329)

6570

Simplify

A

=

60025.6058

A=60025.6058

Use calculator

How much more money Daniel has:

How much more money Daniel has:

60025.6058

Rate 1: 8

4

1

​

%=8+1/4=

 

 

8.25

%

→

0.0825

8.25%→0.0825

Rate 2:

8

1

2

%

=

8

+

1

/

2

=

Rate 2: 8

2

1

​

%=8+1/2=

 

 

8.5

%

→

0.085

8.5%→0.085

Calculate Final Amount for Ellie

Calculate Final Amount for Ellie

‾

Calculate Final Amount for Ellie

Compounded Continuously:

Compounded Continuously:

A

=

P

e

r

t

A=Pe

rt

P

=

13000

r

=

0.0825

t

=

18

P=13000r=0.0825t=18

Given values

A

=

13000

e

0.0825

(

18

)

A=13000e

0.0825(18)

Plug in

A

=

13000

e

1.485

A=13000e

1.485

Multiply

A

=

57394.5504

A=57394.5504

Use calculator (with e button)

Calculate Final Amount for Daniel

Calculate Final Amount for Daniel

‾

Calculate Final Amount for Daniel

Compounded Daily:

Compounded Daily:

A

=

P

(

1

+

r

n

)

n

t

A=P(1+

n

r

​

)

nt

Compound interest formula

P

=

13000

r

=

0.085

t

=

18

n

=

365

P=13000r=0.085t=18n=365

Given values

A

=

13000

(

1

+

0.085

365

)

365

(

18

)

A=13000(1+

365

0.085

​

)

365(18)

Plug in values

A

=

13000

(

1.0002329

)

6570

A=13000(1.0002329)

6570

Simplify

A

=

60025.6058

A=60025.6058

Use calculator

How much more money Daniel has:

How much more money Daniel has:

60025.6058

−

57394.5504

60025.6058−57394.5504

2631.0554

2631.0554

$

2631

$2631

Round to the nearest dollar−

57394.5504

60025.6058−57394.5504

2631.0554

2631.0554

$

2631

$2631

Round to the nearest dollar

Explanation: