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Jose invested \$\$50,000 for 2 years at an annual interest rate of 4 percent compounded yearly. Patricia invested \$50,000 for the same period of time, at the same interest rate, but the interest was compounded quarterly. To the nearest dollar, how much more money did Patricia's investment earn than that of Jose?

I think I get the idea, but I'm not sure what to do.

Feb 24, 2020
edited by Guest  Feb 24, 2020

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Patricia's investment: FV =\$50,000 x 1.01^(2*4)

FV =\$50,000 x  1.0828567056280801

FV =\$54,142.84

Jose's investment:   FV =\$50,000 x 1.04^2

FV =\$50,000  x  1.0816

FV = \$54,080.00

The difference between Patricia's and Jose's investments =54,142.84  -  \$54,080.00 =\$62.84.

Feb 24, 2020

#3
+2

Patricia's investment: FV =\$50,000 x 1.01^(2*4)

FV =\$50,000 x  1.0828567056280801

FV =\$54,142.84

Jose's investment:   FV =\$50,000 x 1.04^2

FV =\$50,000  x  1.0816

FV = \$54,080.00

The difference between Patricia's and Jose's investments =54,142.84  -  \$54,080.00 =\$62.84.

Guest Feb 24, 2020
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