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\(\text{Diana can either invest $20,\!000$ dollars for $4$ years with a simple interest rate of $6\%$ or an interest rate of $7\%$ which compounds quarterly. How many more dollars, rounded to the nearest dollar, would she get with the better interest rate than with the worse one? }\)

 Aug 21, 2019
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Amt with simple interest  =   20000* .06 * 4   = 4800

So....the total money under simple interest  = 20000 + 4800  =  $24800

 

With compound interest  we have

 

20000(1 + .07/4)^ ( 4 * 4)   ≈  $26399

 

The second option is better by    [ 26399 - 24800]  ≈ $1599

 

 

cool cool cool

 Aug 21, 2019
edited by CPhill  Aug 21, 2019

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