ian invested $100 in an account paying an interest rate of 9 1/4% compound daily. Addison invested $100 in an account paying an interest rate of 9 3/8% compounded monthly. After 13 years, how much money would addison have in her account than Ian, to the nearest dollar?
Question
Answer:
$5.67, or $6 rounded to the nearest dollar.
Step-by-step explanation:
To determine the amount that both Ian and Addison will have in their respective accounts after 13 years, knowing that they both invested $ 100 in accounts with daily compound interest, but Ian did it in one with an interest of 9.25% while Addison did it in one with a interest of 9.375%, the following calculations must be made:
Ian = 100 x (1 + 0.00925 / 365) ^ 13×365
Ian = 332.79
Addison = 100 x (1 + 0.009375 / 365) ^ 13×365
Addison = 338.46
338.46 – 332.79 = 5.67
Therefore, Addison will have $ 5.67 more than Ian after the investment term.