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?

AnonymousConfusedGuy
Dec 1, 2017

#1**+1 **

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