kale and merricat are making decisions about their bank accounts. kale wants to deposit $200 as a principle amount, with an interest of 2% compounded quarterly. mericat wants to deposit $200 as the principle amount, with an interest of 4% compounded monthly.

- anonymous

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- anonymous

@ganeshie8 Please help me!

- jim_thompson5910

what do you have so far?

- anonymous

Nothing :( Well, I have a formula?

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## More answers

- jim_thompson5910

which formula do you have

- anonymous

a=p(1+r/n)^nt

- anonymous

I could be wrong

- jim_thompson5910

good

- jim_thompson5910

that formula will be used here

- anonymous

Yay:)

- jim_thompson5910

`Harrison wants to deposit $200 as a principle amount, with an interest of 2% compounded quarterly`
P = 200 is the principal
r = 0.02 is the interest rate in decimal form (2% = 2/100 = 0.02)
n = 4 is the number of times you compound the money per year (quarterly = 4 times)
t = 2 years

- anonymous

ok so then we would just plug it in right? n=200(1+0.02/4)^(2)(4)
right?

- jim_thompson5910

yep

- jim_thompson5910

then compute it with a calculator

- anonymous

I got 204.0401

- jim_thompson5910

I'm getting something slightly higher

- anonymous

Really? Maybe I typed it in wrong

- anonymous

oh okay I got 408.0602! Sorry :)

- jim_thompson5910

did you type in `200*(1+0.02/4)^(4*2)` ?

- anonymous

yes

- anonymous

I got 208.141409 when I did that

- jim_thompson5910

I got that too

- jim_thompson5910

208.141409 rounds to 208.14

- anonymous

Ok :) What do we do next?

- jim_thompson5910

now we move onto the next part
`Sherrie wants to deposit $200 as the principle amount, with an interest of 4% compounded monthly.`
what are P, r, n and t?

- anonymous

p=200
r=0.04
t=12? bcuz 12 months in a year

- jim_thompson5910

yep

- jim_thompson5910

oh wait, no n = 12 and t = 2
since the time frame is 2 years

- anonymous

oh sorry :)

- jim_thompson5910

I forgot to post that `Explain which method results in more money after 2 years.`
so each person has their money in for t = 2 years

- anonymous

Hahaha it's fine:) I get it now

- anonymous

do we plug those value in the same formula?

- jim_thompson5910

yes you'll plug in P = 200, r = 0.04, n = 12 and t = 2

- anonymous

K hold on please

- anonymous

216.63?

- jim_thompson5910

I'm getting the same thing

- anonymous

So the answer would be Sherrie?

- jim_thompson5910

Harrison will have 208.14
Sherrie will have 216.63

- jim_thompson5910

yep she has more money

- anonymous

Thank-you so much!!!!

- jim_thompson5910

no problem

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