Ask Question
24 August, 16:36

Comparing Account Balances In Exercise, $2000 is deposited in an account. Decide which account, (a) or (b), will have the greater balance after 10 years.

(a) 6 1/2%, Compounded monthly

(b) 6 1/4%, Compounded continuously

+3
Answers (1)
  1. 24 August, 20:09
    0
    Answer:account b will have the greater balance after 10 years.

    Step-by-step explanation:

    a) $2000 is deposited in an account. This means that the principal,

    P = 2000

    It was compounded monthly. This means that it was compounded 12 times in a year. So

    n = 12

    The rate at which the principal was compounded is 6.5%. So

    r = 6.5/100 = 0.065

    It was compounded for just 10 years. So

    t = 10

    The formula for compound interest is

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

    A = total amount in the account at the end of t years. Therefore

    A = 2000 (1+0.065/12) ^12*10

    A = $3824

    b) The formula for continuously compounded interest is A = P x e (r x t)

    Where

    e = 2.7183

    A = 2000 * 2.7183^ (0.0625 * 10)

    A = $3736.5
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Comparing Account Balances In Exercise, $2000 is deposited in an account. Decide which account, (a) or (b), will have the greater balance ...” in 📘 Mathematics if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers