Question

Cooper invested $510 in an account paying an interest rate of 3 3\8 % compounded daily. Nora invested $510 in an account paying an interest rate of 3 7/8% compounded monthly. After 7 years, how much more money would Nora have in her account than Cooper, to the nearest dollar?

Answer 1

Answer: Nora have $22 in her account than Cooper

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

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

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

Considering the Cooper's account

P = 510

r = 3 3/8% = 3.375% = 3.375/100 = 0.0375

n = 365 because it was compounded daily.

t = 7 years

Therefore,.

A = 510(1+0.03375/365)^365× 7

A = 510(1.0000925)^2555

A = $645.966

Considering the Nora's account

P = 510

r = 3 7/8% = 3.875% = 3.875/100 = 0.03875

n = 12 because it was compounded monthly.

t = 7 years

Therefore,.

A = 510(1+0.03875/12)^12× 7

A = 510(1.003229^84

A = $668.1

The difference in both accounts is

668.1 - 645.966 = $22