Question

Nathan invested $380 in an account paying an interest rate of 5 7/8% compounded monthly. Caleb invested $380 in an account paying an interest rate of 6 1/4% compounded daily. After 12 years, how much more money would Caleb have in his account than Nathan, to the nearest dollar?

Answer 1

Answer: $37

Explanation:

Answer 2

$36

Explanation:

A = p(1 + r/n)^nt

Nathan

P = $380

r = 5 7/8% = 47/8% = 0.05875

n = 12

t = 12

A = p(1 + r/n)^nt

= 380(1 + 0.05875/12)^12*12

= 380(1 + 0.0049)^144

= 380(1.0049)^144

= 380(2.0216)

= $768.208

Caleb

P = $380

r = 6 1/4% = 25/4%

n = 365

t = 12

A = p(1 + r/n)^nt

= 380(1 + 0.0625/365)^365*12

= 380 (1 + 0.0001712)^4380

= 380(1.0001712)^4380

= 380(2.1166)

= $804.308

Difference

$804.308 - $768.208

= $36.1

To the nearest dollar

= $36