Paula invests $4000 in an account that pays compound interest at a rate of 2.15% per year.
(i) Calculate the value of her investment at the end of 4 years.
Give your answer correct to the nearest dollar.
(ii) Jacinta also invests $4000. She does it in an account that pays simple interest at a rate of 2.2% per year.
Calculate her earnings at the end of 4 years.
Give your answer correct to the nearest dollar.
(iii) Calculate the difference in amount of money between Paula’s account and Jacinta’s account at the end of 4 years.
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Answer:
Answer is (i) $4344
(ii) $4352
(iii) $8
Step-by-step explanation:
- 4000 × 2.15% × 4 = 344
- 4000 × 2.2% × 4 = 352
- 4352 - 4344 = 8
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