Need algebra help: Larry and Peggy are making decisions about their bank accounts.

label Algebra
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

Larry and Peggy are making decisions about their bank accounts. Larry wants to deposit $350 as a principle amount, with an interest of 4% compounded quarterly. Peggy wants to deposit $350 as the principle amount, with an interest of 6% compounded monthly. Explain which method results in more money after 2 years. PLEASE SHOW ALL WORK! 

Nov 25th, 2015

hello


compound interest formula,

A= P(1+(r/n))^(nt)

where A = Final amount

          P = principal

          r = annual rate of interest ( as a decimal)

         n = number of times interest compounded per year

         t = time in years


larrys final amount

    A =  P(1+(r/n))^(nt)

       =  350 ( 1+( 0.04/ 4)) ^(4*2)

       = 350( 1.01)^(8)

      =  $ 379 


peggys final amount

    A = P(1+(r/n))^(nt)

       =  350 ( 1+( 0.06/12) ^(12*2)

       = 350( 1.005)^(24)

      =  $ 394.51 



so peggy's final amount is greater than larry's final amount

PEGGY'S METHOD RESULT IN MORE MONEY



hope you understood..please message if you have any doubts...thank you
Nov 25th, 2015

Did you know? You can earn $20 for every friend you invite to Studypool!
Click here to
Refer a Friend
...
Nov 25th, 2015
...
Nov 25th, 2015
Oct 21st, 2017
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer