Answer:
Part A)
Part B)
Part C) The graph in the attached figure
Step-by-step explanation:
Part A) What will the account be worth in 20 years?
we know that
The compound interest formula is equal to
where
A is the Final Investment Value
P is the Principal amount of money to be invested
r is the rate of interest in decimal
t is Number of Time Periods
n is the number of times interest is compounded per year
in this problem we have
substitute in the formula above
Part B) What if the deposit were compounded monthly with simple interest?
we know that
The simple interest formula is equal to
where
A is the Final Investment Value
P is the Principal amount of money to be invested
r is the rate of interest
t is Number of Time Periods
in this problem we have
substitute in the formula above
Part C) Could you see the situation in a graph? From what point one is better than the other?
Convert the equations in function notation
------> equation A
-----> equation B
using a graphing tool
see the attached figure
Observing the graph, from the second year approximately the monthly compound interest is better than the simple interest.
