Question

PLZZZ HELP!!!!!!!!!!!!!!!!!!!!!!

Harrison and Sherrie are making decisions about their bank accounts. Harrison wants to deposit $200 as a principal amount, with an interest of 2% compounded quarterly. Sherrie wants to deposit $200 as the principal amount, with an interest of 4% compounded monthly. Explain which method results in more money after 2 years. Show all work.

Answer 1

SHERRIE

- Princible P= 200

- Interest rate R= 4% or 0.04

- Number of compounds N= 12

- Time T= 2

HARRISON

- Princible P= 200

- Interest rate R= 2% or 0.02

- Number of compounds N= 4

- Time T= 2

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

Now plug in values for each person:

200(1+0.02/4)^4*2= 208.14

200(1+0.04/12)^12*2= 216.63

And as you can see, the second method (Sherrie's) is the best choice.

Explanation:

Answer 2

Harrison

• Principal P = 200
• Interest rate r = 2% = 0.02
• Number of compounds n = 4
• Time t = 2

Total amount:

• 
  `A = P(1+r/n)^(nt)=200*(1+0.02/4)^(4*2) = 208.14`

Sherrie

• Principal P = 200
• Interest rate r = 4% = 0.04
• Number of compounds n = 12
• Time t = 2

Total amount:

• 
  `A = P(1+r/n)^(nt)=200*(1+0.04/12)^(12*2) = 216.63`

As we see the second method is a better choice