Question

Frank invests $2,500 in an account that has an annual interest rate of 5.4% compounded continuously. Hannah invests $3,000 in an account that has an annual interest rate of 3.2% compounded quarterly. Which of the following statements is true when comparing the amount of money in the two accounts after 10 years?

Answer 1

Answer:

$4,290.02 in Frank's account ; $4,126.13 in Hannah's account

Step-by-step explanation:

Frank:

P = $2,500.00

r = 5.4% annual interest , compounded continuously

t = 10 years

Formula is $A=Pe^{rt}$

$A=2,500.00e^{0.054*10}$ ≈ $4,290.02 the amount of money in Frank's account after 10 years

Hannah:

P = $3,000.00

r = 3.2% annual interest , compounded quarterly

t = 10 years

Formula is $A=P(1+\frac{r}{n})^{nt}$

$A=3000(1+\frac{0.032}{4})^{4*10}$ ≈ $4,126.13 the amount of money in Hannah's account after 10 years