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Sagot :
Using continuous compounding and compound interest, it is found that Matthew would have $17 more than Elizabeth in his account.
Compound interest:
[tex]A(t) = P\left(1 + \frac{r}{n}\right)^{nt}[/tex]
Continuous compounding:
[tex]A(t) = Pe^{rt}[/tex]
The parameters are:
- A(t) is the amount of money after t years.
- P is the principal(the initial sum of money).
- r is the interest rate(as a decimal value).
- n is the number of times that interest is compounded per year.
- t is the time in years for which the money is invested or borrowed.
For both of them:
- Investment of $970, hence [tex]P = 970[/tex]
- Invested for 8 years, hence [tex]t = 8[/tex]
Elizabeth:
- Compounded daily, hence [tex]n = 365[/tex].
- Rate, as a percent, of [tex]6\frac{5}{8} = 6 + \frac{5}{8} = 6.625[/tex], hence [tex]r = 0.06625[/tex].
Then:
[tex]A(t) = P\left(1 + \frac{r}{n}\right)^{nt}[/tex]
[tex]A(8) = 970\left(1 + \frac{0.06625}{365}\right)^{365(8)}[/tex]
[tex]A(8) = 1648[/tex]
Matthew:
- Rate, as a percent, of [tex]6\frac{3}{4} = 6 + \frac{3}{4} = 6.75[/tex], hence [tex]r = 0.0675[/tex].
Then:
[tex]A(t) = Pe^{rt}[/tex]
[tex]A(8) = 970e^{0.0675(8)}[/tex]
[tex]A(8) = 1665[/tex]
The difference is:
1665 - 1648 = 17
Hence, Matthew would have $17 more than Elizabeth in his account.
A similar problem is given at https://brainly.com/question/24507395
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