Answered

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Mr. Larson is debating between investing $10,000 into an account that pays 4% interest compounded daily or 4.9% compounded weekly. Calculate the ending balance and interest earned for each scenario. Which option will earn him
the most money in three years?

Sagot :

sqdancefan

9514 1404 393

Answer:

   4.9% weekly

Step-by-step explanation:

The compound interest formula is ...

  A = P(1 +r/n)^(nt)

where A is the account balance that results from investing P at rate r compounded n times per year for t years.

Filling in the values for the two scenarios, we find ...

  A = 10,000(1 +0.04/365)^(365·3) ≈ 11,274.89

  A = 10,000(1 +0.049/52)^(52·3) = 11,582.74

The higher interest rate will earn Mr. Larson the most money in three years. (4.9% weekly)

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