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26 December, 04:40

Samuel wants to deposit $4,000 and keep that money in the bank without deposits or

withdrawals for three years. He compares two different options. Option 1 will pay 3.8%

interest, compounded quarterly. Option 2 will pay 3.5% interest, compounded

continuously.

a. How much interest does Option 1 pay?

b. How much interest does Options 2 pay?

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Answers (1)
  1. 26 December, 05:49
    0
    First option pays $480.60 in interest and the second option pays $442.84 in interest

    Step-by-step explanation:

    P (1+r/n) ^rt is for compound interest and Pe^rt is for continuous interest
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