Question

Please help.

Jon deposits $4,500 into an account paying 7% annual interest compounded quarterly and Sara deposits $3,250 into an account paying 4% annual interest compounded daily, who will have more money after 1 year? How much more will that person have? Show and explain all work.

Answer 1

Jon will have more money than Sara after 1 year . Jon will have 1440.738 dollars excess money than Sara

Explanation:

As we know

Amount received after application of compound interest is calculated as

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

For Jon

`A = 4500(1+(7)/(4*100))^(4) \\A= 4823.366`

Jon receives $ 4823.366 after one year

For Sara

`A = 3250 (1+(4)/(365*100))^(365*1) \\A = 3382.628`

Jon will have more money than Sara after 1 year . Jon will have 1440.738 dollars excess money than Sara