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Melanie invested $9,800 in an account paying an interest rate of 4 1 2 4 2 1 ​ % compounded quarterly. Amelia invested $9,800 in an account paying an interest rate of 4 3 4 4 4 3 ​ % compounded continuously. After 20 years, how much more money would Amelia have in her account than Melanie, to the nearest dollar?

Sagot :

After 20 years, the amount of Money Amelia would have more than Melanie would be $181,551.37.

What is the future value of Melanie's account?

The formula for calculating future value:

FV = P (1 + r) nm

  • FV = Future value
  • P = Present value
  • R = interest rate = 4 1/2 ÷ 4 = 1.125%
  • m = number of compounding = 4
  • N = number of years

9800(1 + 0.0125)^80 = 23,983.29

What is the future value of the amount in Amelia's account?

the formula for calculating future value when there is continuous compounding is : A x e^r x N

Where:

  • A= amount
  • e = 2.7182818
  • N = number of years
  • r = interest rate

9800 e^0.0475 x 20 = 205,534.66

Difference = 205,534.66 - 23,983.29 = $181,551.37

To learn more about future value, please check: https://brainly.com/question/18760477

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