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anonymous

  • one year ago

Patrick and Brooklyn are making decisions about their bank accounts. Patrick wants to deposit $300 as a principle amount, with an interest of 3% compounded quarterly. Brooklyn wants to deposit $300 as the principle amount, with an interest of 5% compounded monthly. Explain which method results in more money after 2 years. Show all work.

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  1. anonymous
    • one year ago
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  2. kropot72
    • one year ago
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    You need to use the following formula \[\large A=P(1+\frac{r}{n})^{nt}\] where P is the principal, A is the amount after t years, r is the interest rate expressed as a decimal, and n is the number of compounding periods in a year.

  3. kropot72
    • one year ago
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    So plugging in the values for Patrick's investment \[\large A _{P}=300(1+\frac{0.03}{4})^{4\times2}\] and for Brooklyn's investment \[\large A _{B}=300(1+\frac{0.05}{12})^{12\times2}\]

  4. anonymous
    • one year ago
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    Thank you so much!

  5. kropot72
    • one year ago
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    You're welcome :)

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