Amelia plans to open a compound interest savings account with a $22,000 deposit at a bank with an annual interest rate of 5.25%. How much more interest will she earn over 10 years if she chooses an account that compounds interest quarterly instead of annually?

Question

Mathematics

Aiyana Arellano

1 June, 07:26

Amelia plans to open a compound interest savings account with a $22,000 deposit at a bank with an annual interest rate of 5.25%. How much more interest will she earn over 10 years if she chooses an account that compounds interest quarterly instead of annually?

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Answers (1)

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Raiden · Answer 1

Compound interest formula

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

annually:

quarterly:

A = 22,000 (1 + 0.0525/1) ^10 = 36,698.11

quarterly:

A = 22,000 (1 + 0.0525/4) ^ (4*10) = 37,063.29

37,063.29 - 36,698.11 = 365.18

answer: compound interest quarterly earned $365.18 more than annually