Question

Melisa has recently inherited $15,000 that she wants to deposit into a savings account for 10 years. She has determined that her two best bets are an account that compounds annually at a rate of 3.95% and an account that compounds continuously at an annual

rate of 3.85%. How much interest could Melisa gain after 10 years if she chooses the 3.85% account?
A. $22,097.15
B. $22,044.21
C. $7,097.15
D. $7,044.21
E. None of them

Answer 1

She will gain $ 6885.4896 after 10 years if she chooses 3.85% account.

Explanation:

Given,

Principle (P) = $ 15000

Time (T) = 10 years

Rate of interest (R) = 3.85%

To find the compound interest.

Formula

CI =
`P(1+(R)/(100) )^(T)-P`-P

Putting the values we get,

CI =
`15000(1+(3.85)/(100) )^(10)-15000`

= 21885.4896-15000

= 6885.4896

Hence,

She will gain $ 6885.4896.