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# Interest Rates

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Cedric has deposited \$12,000 into an account that pays 5% interest compounded annually. Daniel has deposited \$12,000 into an account that pays 7% simple annual interest. In 15 years Cedric and Daniel compare their respective balances. To the nearest dollar, what is the positive difference between their balances?

Thanks!

Edit: Anyone?

edited by AnonymousConfusedGuy  Dec 1, 2017
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#1
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Cedric has deposited \$12,000 into an account that pays 5% interest compounded annually. Daniel has deposited \$12,000 into an account that pays 7% simple annual interest. In 15 years Cedric and Daniel compare their respective balances. To the nearest dollar, what is the positive difference between their balances?

Balances after 15 years:

Cedric

\(12000(1+0.05)^{15}=12000*1.05^{15}=\$24,947.14\)

Daniel:

interest = PRT = 12000*0.05*15=\$9000

End amount = 12000+9000 = \$23000

So the difference is   \$24,947 - \$23000 = \$1947

Melody  Dec 3, 2017
#2
+257
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Thanks so much!

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